Interest rates in the economy have fallen a lot in the last 2-years. It is extremely difficult to get interest rates of more than 8 per cent on quality deposits and yields of more than 10 per cent over 5-years. However, Shriram Transport Finance Company Fixed deposits offer a yield of as much as 10.77 per cent over a 5-year period.
Details of the Shriram Transport FD
The fixed deposit offers you an interest rate of 8.60 per cent with monthly rests. Now, the interest rate is also higher and interestingly monthly rests means your yields tend to be higher. Currently, banks offer compounding only every quarter, while some institutions offer yearly compounding, which tends to give much lower yields.
The overall yields on the Shriram Transport Finance Company 5-year fixed deposits, thus works to 10.77 per cent, which is not bad at all. So, if you invest a sum of Rs 5,000, the amount that you would get after 5-years is Rs 7,693. This leaves you with a pretty decent returns from the fixed deposits.
What about safety?
Crisil has accorded the deposits a "FAAA" rating, which means a high degree of safety. Another credit rating agency Icra on the other hand has given a rating of "MAA+/ with Stable Outlook".
This makes these deposits relatively safe. Apart from this the 5-year deposit one can opt for various other tenures including, 1, 2, 3 and 4 years.
The interest rate on the 1-year deposit is 7.72 per cent, while the 2-year deposit attracts an interest rate of 7.95 per cent. If you are looking for slightly higher tenure of 3 and 4 years the interest rate offered by the institution is 8.42 per cent and 8.51 per cent.
It is important to note that senior citizens are entitled to an extra 0.25 per cent.
Should you invest in the Shriram Transport Fixed Deposits?
Overall the Fds from Shriram Transport offer decent yield along with safety. This makes it a good proposition to invest. The one thing that investors should note is that there would be a TDS if your interest income is more than Rs 5,000. It is therefore advisable to plan your FD accordingly.
You might want to also submit form 15g and 15h, which enables you to save on income tax, in case your income is below the threshold limit of paying tax.
At the moment this seems to be a good best for those looking to lock money in slightly higher yielding deposit.