Interest rates from some of the larger banks in the country have fallen to a maximum of 5.5 per cent. In fact, some banks are offering interest rates as low as 4.75 per cent. As such it is safer to invest in company fixed deposits, which are owned by the government, be it central government or state government.
KTDFC- Fixed Deposits are guaranteed by the government of Kerala
The Kerala state owned, Kerala Transport Development Finance Corporation (KTDFC) is offering 8 per cent interest rates and 8.25 per cent interest for senior citizens. The fixed deposits are guaranteed by the Government of Kerala, for repayment of deposits up to Rs 4,500 crores along with interest. This guarantee comes vide G.O.(MS) No. 20/2018/TRAN DATED 28.03.2018.
KTDFC is largely a finance company engaged in financing of vehicles, machinery etc. 100 per cent of the capital of the company is owned by the Government of Kerala. Since the deposits are backed by the government of Kerala, they are relatively safe.
Interest rates from KTDFC
Kerala Transport Development Finance Corporation currently offers an interest rate of 8 per cent on its 1, 2 and 3 year deposits. For senior citizens, a 1, 2 and 3 year deposits fetches an interest rate of 8.25 per cent per annum. The yields on a 3-year deposit can go as high as 9.01 per cent for normal deposits and 9.32 per cent for senior citizens.
Given that the interest rates have fallen dramatically over the last few months, such high yields are pretty good. In fact, bank deposits are nowhere close to offering such high yields. A 5-year deposit at KTDFC fetches a slightly lower interest rate of 7.75 per cent per annum.
Other things to remember
It's important to remember that company fixed deposits attract a TDS, if the interest income crosses Rs 5,000. So, in case you are not liable to pay income tax, you might want to submit form 15g or form 15h, as the case maybe.
Investors can invest with a time frame of 1 to 3 years, as the deposits are backed by the government via an order and are hence safe. You will have to download the form from the companies website and there is a phone number, where you can talk to them for clarity. Earlier, there were some brokers handling the distribution, we are not sure of the same now.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds, debt, commodities and tax planning.