Fixed deposit investments are an excellent place to park your money if you want a risk-free product with guaranteed returns. The interest rates on fixed deposits are better than those on other risk-free investment products like Treasury Bills or Government Bonds, which is why they are the best choice among debt investments. Investors, particularly older folks, are experiencing low returns as a result of banks' low-interest rate regime on fixed deposits. However, there is a government-owned company that is now offering the best interest rate of 8% in the market, which is unquestionably the highest when compared to banks, even small finance banks.
Tamil Nadu Transport Development Finance Corporation Ltd
Tamil Nadu Transport Development Finance Corporation Limited (TTDFC), is a wholly-owned non-banking finance company of the Government of Tamil Nadu. This government-owned company offers two types of attractive deposit schemes to the investors such as Period Interest Payment Scheme (PIPS) and Money Multiplier Scheme (MMS). Interest is paid monthly, quarterly, or yearly under PIPS, and the minimum deposit amount approved is Rs.50,000/-. Alternatively, under the Money Multiplier Scheme (MMS), interest is compounded quarterly at the prevailing rate and the minimum amount of money that can be deposited is Rs.50000.
TTDFC's website is straightforward and easy to browse for investors. All operations, from opening a deposit account to withdrawing funds, are undertaken electronically. The TTDFC fixed deposit offers multiple benefits such as loan facility is available up to 75% of the deposit amount, nomination facilities are available subject to the provisions of the RBI, renewal of deposits, primary / joint account opening option, repayment of deposits on maturity, premature withdrawal option and much more.
After three months have passed after the deposit, no premature withdrawals are permitted. Premature withdrawals made after three months but before the end of the six-month period, will not be charged any interest. Premature withdrawals after 6 months will be charged 2% less interest than the rate for a 12-month of deposit. In the event of a premature withdrawal after 12 months, interest will be paid at a rate that is 1% lower than the rate at the maturity date. The deposit amount shall be repaid prematurely to the surviving depositor, in case of death of the primary account holder. If the deposit is requested to be closed prematurely, the depositors must provide at least 1-week prior notice, according to the company's terms & conditions policy.
Interest Rates of TTDFC FD
With effect from 18.01.2021, interest rates on fixed deposit schemes of Tamil Nadu Transport Development Finance Corporation Limited are in force. Below are the most recent interest rates on the Period Interest Payment Scheme and Money Multiplier Scheme of the company.
Scheme - I PERIODIC INTEREST PAYMENT SCHEME
|Others||In %||In %||In %||Senior Citizen||In %||In %|
|Period||Monthly||Quarterly||Annually||Monthly (%)||Quarterly (%)||Annually (%)|
Money Multiplier Scheme (MMS)
|Period (Months)||Basic Rate P.A (%)||Effective Yield P.A (%)||Basic Rate P.A (%)||Effective Yield P.A (%)|
Should you invest?
As the Transport Development Finance Corporation Limited (TTDFC), is wholly owned by the Government of Tamil Nadu, the risk of your deposit is thus minimized. And apart from the deposit safety, the corporation is also promising an interest rate of 8% in the long-term and even a pretty good rate of 7% in the short term which is a maturity period of 12 months.
In the current scenario where leading banks such as SBI, Axis Bank, HDFC Bank, ICICI Bank are offering an interest rate around 5.30% to 5.40%, investing in the fixed deposit scheme of TTDFC can be a smart move. The interest rates of the company are uncomparable as of now with any other banks, even small finance banks. Interest rates of both short-term and long-term deposits of TTDFC are very attractive, but here we suggest investors invest for short-term to counter interest rate risk against their deposit.
The reason behind my take is, currently all the major banks are offering low-interest rates due to record low key policy rates of RBI. And if the economy climbs in the near future and interest rates go up, then you will not get the benefit of higher interest rates, as you had locked in your deposit at the contracted rates. By investing for the short term you would not only avoid interest risk but also interest penalty on premature withdrawal on long-term deposits.
Apart from this risk, investors should also keep their eyes on the rising inflation which may give them returns less than the rate of inflation, if they are in the tax bracket of 30 per cent. So to earn higher returns from your FDs at TTDFC, it is better to invest for short term, and if investing for long-term then diversification across secure debt instruments or equity funds is a must to beat inflation resulting to earn risk-adjusted returns.