Interest on some of the state government owned entities are much better than bank deposits. In fact, some of them give interest rates as high as 8.5% for senior citizens and 8% for regular deposits. Let's take a look at how they compare.
How interest rates on FD compares for individuals (state government deposits vs bank deposits)
|TDFC (State Govt)||7.00%||7.75%||8.00%|
|TN Power (State Govt)||7.00%||7.75%||8.00%|
|KTDFC (State Govt)||6.00%||6.00%||5.75%|
* The above is for individuals, for senior citizens interest rates are around 0.25% to 0.50% more
Good solid interest rates on fixed deposit from state government owned enterprises
The two Tamil Nadu government owned entities, Tamil Nadu Transport Development Finance Corporation (TDFC) and Tamil Nadu Power Finance and Infrastructure Corporation (Tamil Nadu Power Finance) are offering excellent interest rates of as much as 8% for individuals, which makes them the best fixed deposits to invest in terms of interest rates.
Interestingly, the interest rates are as high as 8.5% for senior citizens in both these Tamil Nadu based entities. At one point, KTDFC, which is a government of Kerala owned enterprise was also offering high interest rates of 8%. However, since the start of the year, they have dropped interest rates considerably. The interest rates from some of the government entities on their FDs is almost 2.6% more when compared to bank Fds over 5-year tenure.
How to apply for KTDFC, TN Power Finance and Tamil Nadu Transport Development FDs?
We had in the past personally invested in the deposits of the Kerala owned Kerala Transport Development Finance Corporation. There was no problem with either service or other issues and the redemption was done in time. However, we suggest to go with the fixed deposits of Tamil Nadu Power Finance and Infrastructure Corporation, because the website is excellent for the purpose of online application. In fact, you can even download the app and view you fixed deposits on the app. In fact, the company has 12,28,669 online applications thus far. Having said that you need to upload your KYC related documents, so please keep them ready.
High on safety for these fixed deposits
All of three that is KTDFC, TN Power Finance and Tamil Nadu Transport Development FDs are the best and safe, as they are state backed entities. In fact, the KTDFC fixed deposits are guaranteed by the government of Kerala to the extent of Rs 4,500 crores.
We see no problems with repayment of principal and interest amount for any of these companies. Service wise too we have had a good experience with the deposits of KTDFC. With interest rates on bank FDs around that 5 to 5.5% mark, investing with interest rates at 8% is not a bad idea at all. Having said that if you invest for the very long term and interest rates climb, you maybe trapped with your fixed deposits. We believe that at some stage the Reserve Bank of India maybe forced to increase the repo rates for banks, which should push overall interest rates in the economy higher, as inflation starts trending higher.