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5 Great FD Ideas That Fetch Better Returns Than Bank Deposits

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Interest rates on bank Fds has fallen a great deal and hence it is best to look beyond them. In fact, a bank like State Bank of India now offers an interest rate of just 6.25 per cent on FDs, which is very low. Investors should look at instruments that could fetch higher returns than full fledged commercial bank Fds. Here are 5 great FD ideas.

Jana Small Finance Bank
 

Jana Small Finance Bank

This is a small finance bank and not a full-fledged commercial bank. It offers an interest rate of 8.50 per cent on a 499-day deposit, which is not bad at all.

Senior citizens are entitled to an interest rate of 9.10 per cent, which is pretty decent.

A lesser tenure of 366-days to 498-days offers an interest rate of 8.25 per cent, which is pretty decent considering where interest rates now are. We suggest that investors apply for a slightly longer term duration, which would help fetch better yields. Also, since interest rates in the economy are falling, it makes sense to go for the long-term.

Tata Capital NCDs

Tata Capital NCDs

Tata Capital Housing is currently offering tenures of three, five, eight and 10 years paying interest rates of 8.1, 8.3 per cent, 8.4 per cent and 8.7 per cent respectively.

The non convertible debentures of Tata Capital are currently open. NCDs would be traded on the exchange and hence are very liquid.

Tata Capital Housing Finance Ltd (TCHFL), is a wholly-owned subsidiary of Tata Capital Ltd, and launched its public issue of secured and unsecured redeemable non-convertible debentures (NCDs) worth Rs 2,000 crore on Monday.

The debentures are rated AAA/stable by rating agencies Crisil Ltd and Icra.

Fds of Bajaj Finance
 

Fds of Bajaj Finance

The fixed deposits of Bajaj Finance also offer a very decent interest rate. A 36 to 60 month deposit offers an interest rate of 8.10 per cent, on a cumulative basis. An extra 10 per cent is available for Bajaj Group employees, Bajaj Finance Ltd customers and Bajaj Allianz Life Insurance existing policyholders.

These deposits are rated AAA by some of the rating agencies in the country and are hence very safe. Investors with a long-term objective in mind can consider the same.

Since interest rates in the economy are falling, it is better to lock money for the longer term.

Suryoday Small Finance Bank

Suryoday Small Finance Bank

This is another small finance bank, just like Jana Small Finance Bank. The interest rate offered on a 5-year deposit is 9 per cent.

For senior citizens the interest rate offered is 9.25 per cent. Small saving banks are regulated by the RBI and are hence very safe.

Mahindra Finance

Mahindra Finance

Mahindra Finance offers an interest rate of 8.35 per cent on a 33-month deposit. The deposits are relatively safe as they are AAA rated. Also, both the deposits of Mahindra Finance and Bajaj come from a solid renowned group.

We wish to inform readers that there would be a tax deducted at source that is applicable. In the case of company Fds the amount that attracts TDS would be Rs 5,000. As indicated earlier, deploy money for the slightly longer term, so as to benefit in case interest rates fall.

Read more about: fixed deposit fd bank returns
Story first published: Tuesday, January 7, 2020, 13:52 [IST]
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