Bank interest rates have now fallen even below the 7 per cent mark, with interest rates on Fds of even State Bank of India fetching a maximum of 6.4 per cent. Interest rates have fallen very steeply and are at dismal levels. It's time to look at company Fds that are AAA rated and offer much better interest rates.
LIC Housing Finance Fds
This is a AAA rated FD and hence the deposits are very secure. The company offers an interest rate of 7.95 per cent on its 3 and 5 year deposits. If you are looking to invest for 2 years the deposit interest rate would be 7.90 per cent.
As you can see the deposit interest rates are way beyond what a bank like State Bank of India offers. LIC Housing Finance has a substantial stake by LIC and is also well rated.
NRIs can also invest in the company with a maximum tenure of 3-years. Go for these deposits as they are relatively safe.
PNB Housing Finance
PNB Housing Finance is another AAA rated deposit, which should be good for investors. In fact, this is strongly recommended given that the interest is higher than 8 per cent. PNB Housing Finance offers an interest rate of 8.40 per cent and 8.50 per cent on its 5-year deposits.
The housing finance company also offers a 1-year tenure deposit, where the interest rate is 8.10 per cent and a two-year deposit, where the interest rate is 8.15 per cent.
While it's important to remember that company Fds are not very safe, there is an element of safety in PNB Housing Finance, given that it is promoted by Punjab National Bank. Go for these deposits with a slightly longer term tenure.
Here again the deposits are AAA rated and are very secure. The Housing Finance company offers an interest rate of 7.62 per cent across tenures. So, a 1,2,3,4 and 5 year deposit offers an interest rate of 7.62 per cent.
Even though this is the lowest from among all the deposits of NBFCs and Housing Finance companies, the deposits are very safe.
Investors can look at both cumulative as well as the non cumulative option.
Bajaj Finance too offers very attractive interest rates to investors. The 1-year tenure offers an interest rate of 8.00 per cent, while the 2-year tenure offers an interest rate of 8.05 per cent, while the 3-year tenure offers an interest rate of 8.35 per cent.
We suggest that investors should lock-in money for the long term, due to the fact that interest rates on deposits are headed lower.
Bajaj Finance fixed deposits are safe as they are well rated. They also come from a very strong promoter background, which makes the Fds attractive. As mentioned earlier it would be good if investors take a long-term perspective in mind.
Mahindra and Mahindra Financial Services
Mahindra and Mahindra Financial Services is offering an interest rate of 8.40 per cent across 3,4 and 5 year tenure.
Again, the deposits are well rated and are AAA. Investors could lock money in these deposits for a long-term duration. The company offers both a cumulative and a non-cumulative deposit scheme.