At the time of opening of a fixed deposit (FD) account, investors tend to scan through the latest rates offered by different banking institutions. Some investors, in a bid to earn a higher income, explore the rates offered by Non Banking Financial Corporations (NBFCs) that are known for offering higher interest rates vis-à-vis their banking counterparts.
The difference in the interest rates offered by the two sets of institutions could range between 25 basis points to 100 basis points, however, this marginal difference could eventually lead to higher savings when you factor in compounding.
Highest rates offered by NBFCs across tenures
| Name of NBFC | Highest interest rate (%) | Tenure (months) |
| Shriram Finance | 8.5 | 50 |
| Bajaj Finserv | 8.35 | 44 |
| Muthoot Capital | 7.25 | 60 |
| Sundaram Finance | 7.75 | 24/36 |
| LIC Housing finance | 7.75 | 36/60 |
(Source: Websites of NBFCs. Interest rates shown here apply to non-senior citizens).
Here we list out some of the NBFCs which offer a higher rates of interest:
Shriram Finance:It offers as high as 8.5 percent per annum on 50-month deposits. The deposits with one-year tenure offer an interest of 7.60 percent. The deposits with two-year tenure offer an interest rate of 8.05 percent.
For a three-year tenure, investors can earn an interest of 8.25 percent, which grows to 8.50 percent for a deposit of 50 months.
Bajaj Finserv: The highest rate offered by Bajaj Finserv is 8.35 percent for a 44-month period. This is a special interest rate offered for a special period. Barring 44 months, when the FD is opened for a tenure between 36 to 60 months, the interest rate that is offered is 8.05 percent per annum.
Likewise, the NBFC offers an interest of 7.75 percent on 33-month term deposit, an interest of 7.45 percent on its 30-month FD, and an interest of 7.5 percent on its 22-month FD.
Muthoot Capital: It offers highest interest of 7.25 percent on its fixed deposits with 5-year tenure. The rates are meant for cumulative deposits which require a minimum investment of ₹1,000.
The FDs with four-year and three-year tenures offer an interest of 6.75 percent per annum. The FDs with two-year tenure offer 6.5 percent interest rate and the FDs with one year tenure accrue a yield of 6.25 percent per annum.
Sundaram Finance: This NBFC offers the highest interest rate of 7.75 percent for a tenure of 555 days, 24 months and 36 months.
Fixed deposits with a shorter tenure of 12-months bear an interest rate of 7.45 percent per annum. At the same time, senior citizens are entitled to receive a higher rate that stretches to 8.25 percent for a fixed deposit of 24 and 36 months.
LIC Housing Finance: It offers the highest interest rate of 7.75 percent on public deposits of 5-year and 3-year tenure.
The public deposits with two-year tenure offer an interest rate of 7.6 percent. It falls to 7.35% for 1n 18-month tenure. For a shorter tenure of 12 months, the NBFC offers an interest of 7.25 percent.
Besides, senior citizens are entitled to an additional benefit of 0.25% for deposits of ₹20,000 and above.
Although these deposits offer higher rates of interest, it is incumbent upon investors to exercise caution and make sure that the deposits they are opting for carry a high credit rating such as AAA given by any of the reputable agencies such as Crisil, ICRA and CARE.
