COMPANY FIXED DEPOSITS: Lock in to higher interest rates now

financialexpress.com:

As non-banking financial companies (NBFCs) are offering higher interest rates on fixed deposits than banks, individuals, especially senior citizens, can lock in for a longer tenure. However, they must keep in mind that these deposits, unlike banks, are not insured under Deposit Insurance and Credit Guarantee Corporation and carry a higher risk compared to bank deposits.

Companies such as Bajaj Finance are offering 8.05% on fixed deposits (FD) for a tenure of five years and an additional 25 basis points for senior citizens. It has also launched special tenure FDs for senior citizens. One of the highest interest rates offered to senior citizens is 8.60% for a tenure of 44 months. Similarly, Shriram Finance is offering 8.18% for a tenure of five years and an additional 50 basis points to senior citizens.

In contrast, State Bank of India is offering 6.5% for a five-year FD. Its 400-day special scheme Amit Kalash is offering 7.1% to the general public and 7.6% to senior citizens. HDFC Bank is offering 7% for a tenure of five years. The bank also has a special FD scheme offering 7.2% for 35-month and 7.25% for 55-month tenure. Senior citizens will get 50 basis points more. Also, the 5-year post office time deposit is offering 7.5%.

“We have seen how FDs have peaked after consistent hikes in repo rates. Currently, banks are offering more than 7% while NBFCs are giving more than 8%. This is the right time to lock your FDs at the higher rates and reap the benefits,” says Adhil Shetty, CEO, Bankbazaar.

Consider the risks

Companies or NBFCs typically offer higher interest rates on FDs due to their higher risk profile compared to banks. Before investing in an NBFC’s FD, it is essential to check the company’s credit rating and