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Fixed deposits (FDs) continue to be one of the most popular investment options among people in India due to their relatively safe returns and predictable income. These deposit facilities are widely offered by commercial banks and are found to attract investors due to the stable interest rates and safety associated with such institutions. However, in recent years, non-banking financial companies (NBFCs) have also entered the fixed deposit market, providing an alternative option for investors seeking higher yields.
While commercial banks usually offer lower FD interest rates due to their well-regulated structure and safe operations, NBFCs often offer more attractive rates of return. This difference is primarily due to the increased ‘credit risk’ associated with NBFCs. Due to the nature of their business, NBFCs are riskier compared to traditional banks and often charge higher interest rates to compensate investors for assuming the additional risk.
However, keep in mind that not all NBFCs offer higher interest rates. The interest rate is determined by various factors such as the NBFC’s credit rating, financial health, and market conditions. Many NBFCs with high credit ratings offer competitive interest rates that are close to those of commercial banks, aiming to balance risk and return for investors.
Here is a list of NBFCs offering high interest rates on FDs:
NBFC Organization 1 Year Interest Rate 3 Year Interest Rate 5 Year Interest Rate Tenure ICICI Home Finance 7.00% 7.40% 7.50% 12-120 Months Bajaj Finance Ltd. 7.40% 7.80% 8.10% 12-60 Months HDFC Ltd. 7.10 % 7.40% 7.40% 12 to 120 months LIC Housing Ltd. 7.25% 7.75% 7.75% 12 to 60 months Manipal Housing Finance Syndicate Ltd. 7.75% 7.75% 7.25% 12 to 60 months Mahindra Finance 7.40% 7.70% 7.75% 12 – 60 months PNB Housing Finance Ltd. 7.35% 7.70% 7.50% 12 – 120 months Muthoot Capital Services Limited 6.25% 6.75% 7.25% 12 – 60 months Shriram Finance Ltd. 7.34% 7.95% 8.18% 12 – 60 months Sundaram Finance 7.45% 7.75% – 12-36 months
Additional benefits for the elderly regarding FD
Non-banking financial companies (NBFCs) in India evaluate several factors while determining interest rates on fixed deposits, aiming to balance investor attractiveness with sustainable business growth. Key considerations include current repo rates, internal profitability objectives, and organizational policies. These factors collectively form the interest rate offered, and the NBFC adjusts the interest rate depending on economic and market conditions. NBFCs with high credit ratings, especially AAA ratings from reputable agencies like ICRA and CRISIL, are generally considered safer investment options. To further attract senior citizens, most NBFCs offer an additional interest benefit of 0.25% on fixed deposits.
Also Read: Fixed Deposit Interest Rates May Come Down Soon! List of Banks Offering Best Interest Rates on FD | Check Here
