As the economy is facing a struggle due to COVID-19's impact on the various sectors and industries. It becomes important to save your hard-earned money and invest them in FDs. But where? Most banks have slashed their rates on FDs due to the slowdown in the economy. Nowadays, it has become hard to find high-interest rate FDs as almost every financial institution, particularly banks are struggling with their operation and deposits. Out of the blue, there are some NBFCs (non-banking finance companies) that are offering higher interest on their deposits compared to what regular commercial banks offer.
The interest rates offered by these NBFCs are attractive and don't require a big sum amount to start FDs with them. An individual with a minimum investment of Rs, 1000 to Rs 10000 can start their FD in the respective institution of their choice.
Here are the 10 NBFCs that offer good ROI with a high rate of interest and a history of offering fixed deposits to various customers for decades.
|Sr. No.||NBFC||Interest Rates (p.a)||Interest rate (p.a) Senior Citizens||Minimum Deposit||Tenure|
|1||Hawkins Cooker Ltd||8.00%||NA||25000||3 years|
|2||Shriram City Union Finance||7.75%||8.05%||5000||5 Years|
|3||Shriram Transport Finance Company||7.48%||7.78%||5000||5 years|
|4||Muthood Finance||7.25%||NA||1000||5 Years|
|5||Bajaj Finserve||6.80%||7.05%||25000||3-5 years|
|6||HDFC Housing Finance||6.70%||6.95%||NA||8.25 Years|
|7||Aditya Birla Capital||6.45%||6.70%||5000||5 Years|
|8||Mahindra & Mahindra Finance Service Ltd||6.05%||6.50%||5000||5 Years|
|9||KTDFC Ltd||6.00%||6.25%||10000||3 Years|
|10||Sundram Finance||5.80%||6.30%||10000||3 Years|
Source - Respective Company Website
To start investment in these NBFC FDs, all you would need to have is your PAN as well as a valid identity and address proof document such as Aadhaar Card. Some of them allow you to invest online, whereas some offline. Senior citizens are offered an additional 20% to 50% on the regular interest rates offered to the other customers. Note that, the FDs offered by the Corporate/NBFCs are not insured by DICGC compared to bank FDs.
Corporate FDs are Taxable?
Interest earned on FDs issued by NBFCs gets ROI like interest earned on bank FDs, and it is taxed at the depositor's highest income tax level. However, only if the annual interest income from the deposit exceeds Ra 5,000, the investor required to pay tax.
Why should you Invest in Corporate FDs over Bank FDs?
Corporate FDs offer a terrific opportunity for individuals seeking better returns, as well as diversifying their portfolios. They pay a greater rate of interest than bank FDs. They may be compared in terms of operations and ratings, making it easier to select a suitable corporate FD candidate.
Depositors should consider storing a portion of their savings in FDs offered by NBFCs, given the low-interest rates offered by banks. After exhausting the government's small-savings programs, you can consider these deposits. Though debt funds are preferable, these NBFC deposits are suited for conservative investors. While making a choice, choose the NBFC FDs to invest that have high rated deposits or deposits that are rated AAA by rating agencies such as CRISIL, ICRA.
These should not be construed as advice. If in doubt, get advice from a financial expert or visit the respective NBFC for more information.