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Five NBFC fixed deposits with AAA rating that offer up to 6.5% interest

The rates offered by these NBFCs are higher than those given by top public and private sector banks

October 17, 2021 / 10:05 PM IST
Most banks have slashed rates on fixed deposits. Now, non-banking finance companies (NBFCs) offer higher interest on their deposits than what regular banks do. This could be as high as 100 basis points more for certain tenures. Here are five NBFCs with strong pedigree and history of offering deposits to customers for decades. These NBFCs are rated AAA, which is the highest credit rating, by multiple agencies such as CRISIL, ICRA and CARE. You would need your PAN as well as identity/address proofs to open an FD account with these NBFCs. Some of them allow you to invest online. Tax is deductible at source on interest in excess of Rs 5,000 in a year. Senior citizens are offered 25 to 50 basis points extra interest.
Most banks have slashed rates on fixed deposits. Now, non-banking finance companies (NBFCs) offer higher interest on their deposits than what regular banks do. This could be as high as 100 basis points more for certain tenures. Here are five NBFCs with strong pedigree and history of offering deposits to customers for decades. These NBFCs are rated AAA, which is the highest credit rating, by multiple agencies such as CRISIL, ICRA and CARE. You would need your PAN as well as identity/address proofs to open an FD account with these NBFCs. Some of them allow you to invest online. Tax is deductible at source on interest in excess of Rs 5,000 in a year. Senior citizens are offered 25 to 50 basis points extra interest.
Bajaj Finance leads the pack in terms of interest rates on fixed deposits across tenures. FDs come in tenures ranging from 12 months to 60 months. For the five-year tenor,  the Bajaj Finance FD offers 6.5 percent interest for the cumulative option. The minimum investment required is Rs 25,000. It is a leading consumer finance company.
Bajaj Finance leads the pack in terms of interest rates on fixed deposits across tenures. FDs come in tenures ranging from 12 months to 60 months. For the five-year tenor,  the Bajaj Finance FD offers 6.5 percent interest for the cumulative option. The minimum investment required is Rs 25,000. It is a leading consumer finance company.
ICICI Home Finance is the next in the list in offering attractive deposits. It is rated AAA by all three agencies. It offers deposits for tenures ranging from 12 months to 120 months. For a five-year tenor, the company offers 6.45 percent interest. It offers 6.65 percent interest on deposits made for 72 months or more. The minimum investment required is Rs 10,000
ICICI Home Finance is the next in the list in offering attractive deposits. It is rated AAA by all three agencies. It offers deposits for tenures ranging from 12 months to 120 months. For a five-year tenor, the company offers 6.45 percent interest. It offers 6.65 percent interest on deposits made for 72 months or more. The minimum investment required is Rs 10,000
Among the strongest players in the home loan space, HDFC is a familiar name for most borrowers and depositors. The company offers 6.4 percent interest on its 60-month deposit. FDs are available in tenures ranging from 12 months to 120 months. The minimum investment required is Rs 20,000.
Among the strongest players in the home loan space, HDFC is a familiar name for most borrowers and depositors. The company offers 6.4 percent interest on its 60-month deposit. FDs are available in tenures ranging from 12 months to 120 months. The minimum investment required is Rs 20,000.
Mahindra & Mahindra Financial Services is not just into funding tractor purchases. It offers financing for a whole host of activities and equipment purchases. It offers 6.45 percent interest on deposits made for 60 months. Deposits are available for tenors of 12-60 months. The minimum investment amount is Rs 5,000. This company, too, is rated AAA.
Mahindra & Mahindra Financial Services is not just into funding tractor purchases. It offers financing for a whole host of activities and equipment purchases. It offers 6.45 percent interest on deposits made for 60 months. Deposits are available for tenors of 12-60 months. The minimum investment amount is Rs 5,000. This company, too, is rated AAA.
Sundaram Finance is one of the oldest and reliable names from the south in vehicle and equipment financing. Unlike the other NBFCs mentioned earlier, the company offers deposits only for 12,24 and 36 months. The minimum deposit amount required is Rs 10,000. The interest rate on the 36-month FD is 5.8 percent. Sundaram Finance deposits are rated AAA.
Sundaram Finance is one of the oldest and reliable names from the south in vehicle and equipment financing. Unlike the other NBFCs mentioned earlier, the company offers deposits only for 12,24 and 36 months. The minimum deposit amount required is Rs 10,000. The interest rate on the 36-month FD is 5.8 percent. Sundaram Finance deposits are rated AAA.
Given that interest rates offered by banks are low, depositors can consider parking a portion of their portfolio in FDs offered by NBFCs. They can consider these deposits after exhausting the small-savings schemes of the government. Though debt funds would be a better option, for conservative investors, these NBFC deposits would be suitable. There are no tax deductions available on these deposits. It must be noted that insurance offered by the DICGC, which covers bank deposits up to Rs 5 lakh, is not available for the FDs of NBFCs. But as indicated earlier, these are all rated AAA and depositors have relied on them for decades. These are not to be taken as recommendations. Consult your financial advisor in case of doubt.
Given that interest rates offered by banks are low, depositors can consider parking a portion of their portfolio in FDs offered by NBFCs. They can consider these deposits after exhausting the small-savings schemes of the government. Though debt funds would be a better option, for conservative investors, these NBFC deposits would be suitable. There are no tax deductions available on these deposits. It must be noted that insurance offered by the DICGC, which covers bank deposits up to Rs 5 lakh, is not available for the FDs of NBFCs. But as indicated earlier, these are all rated AAA and depositors have relied on them for decades. These are not to be taken as recommendations. Consult your financial advisor in case of doubt.
Venkatasubramanian K
first published: Oct 14, 2021 09:54 am

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