As they say a rising tide lifts all boats. When interest rates are on an upward trajectory, all interest rates — from lending to term deposits – are witnessing a rise.
Recently, Shriram Transport Finance Company raised its fixed deposit (FD) interest rate to hit 8.30 p.a. for five-year tenure. Upon adding the extra premium given to senior citizens and female depositors, the rate of interest goes as high as 8.9 percent per annum.
The relatively short duration deposits accrue lower rates. For example, the deposit of 48 months offer an interest of 8.20 percent. A term deposit of 42 months gives an interest of 8.15 percent. Similarly, the term deposits of 36 month and 30-month tenure will give an interest of 8.05 percent and 8 percent, respectively.
At the same time, one year and 18-month deposits offer an interest of 7 percent and 7.30 percent, respectively.
Although there is no denying the fact that NBFC fixed deposits give a higher rate of interest than the banks, but investors must be aware that deposits with these institutions are not as credible as bank FDs.
So, before investing your money, it is advisable to check the credit rating of corporate FDs instead of getting carried away with a higher rate of interest to the tune of 100-120 basis points.
Interest rates offered by leading NBFCs are higher than those of banks. Here we summarise the rate of interest offered by some of the leading NBFCs:
Bajaj Fincare: Bajaj Finserv offers an interest of up to 7.6 percent on cumulative fixed deposits of 44-month tenure. The NBFC offers different rates of interest for different tenures. These deposits have Crisil rating of AAA/ stable.
On a deposit of 45-60 months, the rate of interest that accrues is 7.5 percent, on a deposit of 36-43 months, the rate of interest is 7.5 percent, as the chart below shows. A deposit of 34-35 months gives an interest of 7.25 percent, a 33-month deposit offers an interest of 7.35 percent and 30-month deposit offers an interest of 7.35 percent.
LIC Housing Finance: It offers an interest of 6.7 percent per annum on public deposits up to ₹20 crore in monthly option and 6.75 percent in yearly option. These deposit have AAA/ Stable rating by Crisil.