It is no surprise any more that interest rates offered by commercial banks and non-banking financial institutions (NBFCs) on their term deposits are on a rise. Ever since the Reserve Bank of India (RBI) raised repo rates in the month of May, banks followed suit by raising interest rates on fixed deposits as well as lending rates.
This often makes investors wonder whether this is the right time to start their term deposit accounts. However, if they do, they will be tied up with old interest rates, particularly after the rates have risen.
To help investors get over this, Bajaj Finance offers a product called systematic deposit plan, which is similar to a systematic investment plan (SIP). The systematic investment plans are designed on a premise that investors are unable to time the markets and hence, they can stagger their investments over a period of time to capitalise on the cost of averaging.
Likewise, when investors open their fixed deposits (FD) accounts over a period of time, they stand to earn a higher income rate as the interest rate cycle moves forward.
The interest offered by the NBFC is up to a maximum of 7.4 percent for tenor between 36 to 60 months. For a shorter tenor i.e., 24-35 months, the rate of interest is 6.95 percent and for 12-23 months, the interest is 6.20 percent, as shown in the table below.
Besides the above-mentioned interest rates, there are special interest rates offered for systematic deposit plans of a specific tenor. For instance, in case of SDP for 15 months, the rate of interest is 6.4 percent; for 18 months, it is 6.5 percent; for 22 months, it is 6.65 percent; for 30 months, the interest rises to 7.05 percent; for 33 months, the interest is 7.15 percent and for 44 months, it is 7.5 percent.
It is worth mentioning here that each deposit is considered a separate deposit account and hence, depositors will be issued a separate FD receipt for each deposit.
Also, if the depositor feels the need to cancel the deposit at any time, they can cancel the same and discontinue the SDP.