scorecardresearchFixed Deposit rates: How do they stack up against interest offered by banks

Fixed Deposit rates: How do they stack up against interest offered by banks & NBFCs

Updated: 29 Jun 2022, 08:48 PM IST

As Bajaj Finance raised deposit rates the second time in a month, we compare bank FDs' rates with those of corporate & NBFC FDs

Bajaj Finance offers 7.20 per cent interest rate to depositors for a tenor of 44 months.

Bajaj Finance offers 7.20 per cent interest rate to depositors for a tenor of 44 months.

Unsurprisingly, fixed deposits — particularly in upbeat times — are not considered a sought-after financial instrument by retail investors for their relatively poorer returns and the availability of other lucrative options galore such as mutual funds and equities, among others.

But this status quo is now witnessing a change. Financial institutions across the board have been raising their interest rates one after the other amid growing market volatility.

Bajaj Finance has raised interest rates by up to 10 basis points on its fixed deposits for tenor between 36 months to 60 months, with effect from May 10.

The revised interest rates will be applicable to fresh deposits as well as renewals of maturing deposits. Accordingly, deposits between 36 to 60 months will earn a return of 7 per cent.

The lender also slashed the minimum deposit size from 25,000 to 15,000 to attract more depositors. Towards the end of last month, it raised its deposit rates by a maximum of 60 basis points.

The NBFC has introduced a special interest rate for its fixed deposits, where the depositor can earn 7.20 per cent interest rate for a tenor of 44 months.

Soon after the monetary policy committee (MPC) hiked benchmark interest rate (repo rate) by 40 basis points to 4.40 per cent on May 4 to curb the rising headline inflation, banks have started to raise deposit rates.

A number of banks including Bank of Baroda, Bandhan Bank, Kotak Mahindra Bank, ICICI Bank, and Punjab National Bank have announced increase in deposit rate across multiple tenor baskets for retail customers.

Banks Vs non-bank deposits

When it comes to investing in corporate FDs, some depositors are apprehensive of parking their money since these deposits are unsecured.

It is vital to note that all NBFC which want to collect deposits have to adhere to stringent guidelines laid down by the banking regulator i.e., RBI.

No wonder then only a handful of NBFCs are allowed to accept deposits from the public. These measures ensure that there is minimum risk for the investors when it comes to putting money into corporate fixed deposits.

FD rates offered by corporate FDs:


Rates offered by HDFC to depositors

MonthsRate of interest (%)
24-35 Months5.85
36-59 Months 6.20
60-83 Months 6.40

(Regular deposits upto 2 crore w.e.f. May 4)


Shriram Transport FD rates

YearRate of interest (%)
1.         6.5
2.         6.75
3.        7.5
5.         7.75

(Non-cumulative deposits under 5 crore online mode w.e.f. Aug 2021)


FD rates offered by NBFCs


Bajaj Finance FD rates:

YearRate of interest (%)
1        5.75
2         6.4
3-5     7

(Non-cumulative deposit up to 5 crore w.e.f. May 10, 2022)


Mahindra Finance FD rates:

Months            Rate (%)
30                    6.3
42                  6.5

(Dhanvruddhi Cumulative - Fixed Deposit Interest Rates Only for online investors w.e.f 20th September 2021)

FD rates offered by banks:


State Bank of India (SBI)

Years              Interest (%)
1                      5.10
2                      5.20
3                     5.45
5                      5.50

(Interest on domestic term deposits below 2 crore w.e.f. Feb 15, 2022)


HDFC Bank: 

Year                Rate of interest (%)
1                     5.10
2                    5.10
3                      5.20
5                      5.45

(Deposits made under 2 crore w.e.f. April 20, 2022)


There is no denying the fact that corporate FDs offer higher rate of interest than what the banks do. But as one would expect, they are not as credible as bank FDs are. So, before investing your money, depositors must check the credit rating of corporate FDs instead of being carried away with a higher rate.

First Published: 12 May 2022, 09:16 AM IST