The housing finance company HDFC recently launched sapphire deposits offering 7.5 percent per annum for 45 month-tenor. The scheme was introduced on October 14 for individuals and trusts on deposits of up to ₹2 crore.
This is certainly higher, albeit marginally, than what most banks usually offer on their term deposits.
Canara Bank, IDFC Bank, RBL Bank and Union Bank offer 7 percent on their long-term term deposits. The maximum interest offered by two banks (i.e., IDFC and RBL) is 7.25 percent is for 750 and 725 days, respectively.
So, investors have the option of earning extra to the tune of 25 to 50 basis points when they opt for HDFC’s long term sapphire deposits of 45 months. However, some experts advice investors to take a calculated risk and invest in market instruments instead of relying on fixed deposits (FDs).
“When the difference in interest rate is only one percent, then it is not advisable to opt for an NBFC or even a private bank. As far as fixed deposits are concerned, I always tell my clients to go for PSU banks. However, if someone is risk-prone then it is better to take a calculated risk and invest in mutual funds to be able to earn a higher return,” says CA Chirag Chauhan, Wealth Management Advisor.
Special deposits
The housing finance company also accepts special and premium deposits wherein it offers anywhere between 6.5 percent to 7 percent per annum.
In case of special deposits, HDFC offers 6.9 percent per annum for a tenor of 33 months, 6.95 percent for 66 months, 6.9 percent for 77 months and 7 percent for 99 months.
These rates (w.e.f. Sept 30) are based on annual payment of interest. The rate of interest falls by 10 basis points in case of half-yearly deposits, 15 basis points in case of quarterly deposits and 20 bps in case of monthly, as shown in the chart below.
Premium deposits
At the same time, investors can explore premium deposits with HDFC that are term deposits of relatively shorter tenure i.e., between 18 to 44 months.
For 44 months, the rate of interest is 6.9 percent, it declines to 6.7 percent for a 30-month tenure, 6.6 percent for 22-month tenure and 6.5 percent for 18-month tenure.
The interest rates are based on the annual payment of interest. These rates, thereby, fall by 10 basis points in case of half-yearly deposits, 15 basis points in case of quarterly deposits and 20 bps in case of monthly deposits.
