Bank deposits are falling and falling real fast. The Reserve Bank of India (RBI) has cut interest rates by 1.25 per cent last year and another 0.25 points this year (on April 5). Banks have also followed suit and slashed interest rates. The best interest rates that State Bank of India is offering on deposit rates is 7.5 per cent per annum.
Most deposits hover around that range, with ICICI Bank too offering a maximum of 7.5%. But, these interest rates are nowhere close to 9% that was prevailing a year back. It's still possible to look at higher interest rates and for that you need to look at solid company deposits.
Interest rates on select company deposits
|KTDFC||DHFL Ashray ||Bajaj Finserv|
KTDFC offers an interest rate that is slightly higher for deposits above Rs 25 lakhs. The interest rates for senior citizens is 0.25 per cent more on all of the above deposits.
Company deposits as we all know are deposits that are not very safe. This is because they are not secured deposits and there have been cases in the past where companies have defaulted on payment of principal and interest amount. Here is where the above fixed deposits score. Kerala Transport Development Finance Corporation (KTDFC) is backed by the government of Kerala, which guarantees the deposits.
On the other hand DHCL and Bajaj Finserv are highly rated deposits and come with a strong pedigree.
Good time to invest in the above deposits as interest rates may fall
You can get interest rates of high as 10% on the above deposits, with the yields significantly higher due to compounding. In fact, if you have a sum in excess of Rs 25 lakhs to invest, the yield can go up to 10% in the case of KTDFC.
This interest rate is simply fantastic considering the present bank interest rates. Direct credit into your bank account through ECS are the other benefits of these deposits. We believe that interest rates on deposits will fall further. Therefore, you should invest in these deposits with a longer term perspective of at least 3 years.