NBFC FD vs Bank FD: Which Is Better? Check Latest FD Rates For August 2025

NBFC vs Bank FD Rates: Fixed deposits are one of the most stable and safe options of investment to earn guaranteed returns. Investors can park their money in FDs without worrying about stock market volatility, geopolitical uncertainty, economic conditions and other factors. FD investment is considered one of the best options for risk-averse investors.

Nearly all the public and private banks offer fixed deposit investment options to customers for multiple duration which can be as less as seven days or as long as seven years. Other than banks, non banking financial companies (NBFCs) also offer FD investment options to their customers. But what are NBFCs? How are NBFC FDs different from bank FDs? Which one is better? Let's try to find out here.

What Is an NBFC?

From giving credit, offering loans to financing assets, NBFCs function just like banks, but without a full banking license. They operate under the Reserve Bank of India's supervision, following the guidelines of the RBI Act, 1934.

NBFCs are vital for promoting financial inclusion, particularly in rural and semi-urban regions. They offer faster processing, flexible terms, and focus on underserved sectors. Their support extends to key economic areas such as housing finance, infrastructure funding, consumer finance, and Micro, Small, and Medium Enterprises (MSMEs).

How Are NBFCs Different From Banks?

While NBFCs offer all the credit facilities just like banks, they do not fully function as bank as they can't perform core functions like accepting demand deposits or issuing cheques.

What Are The Key Features of NBFCs?

NBFCs provide various services, including loans and credit facilities, asset financing, investments in shares, bonds, securities, leasing, hire purchase, microfinance, and insurance through subsidiaries. However, they cannot accept demand deposits like savings or current accounts, nor offer chequebook facilities. Additionally, they are not part of the payment and settlement system.

Registration with the RBI is mandatory for NBFCs if their financial assets exceed ₹100 crore or if over 50% of their business involves financial activities. This ensures that they adhere to regulatory standards while operating within India's financial landscape.

What Are NBFC FDs?

Generally, NBFC FDs have relatively higher interest rates compared to bank FDs. These fixed deposits are offered by NBFCs to customers, where they can invest their money in a lump sum for a fixed duration to get a fixed interest, just like bank FDs. Then how are they different from Bank FDs? Here are the key reasons mentioned below.

How Are NBFC FDs Different From Bank FDs?

Unlike bank FDs which are operated under RBI guidelines, NBFC FDs are operated under RBI, but under NBFC norms, not full banking regulations. These FDs are not insured DICGC. In many cases, NBFC FD withdrawal is restricted by the financial institution and may lead to penalisation.

Top Bank FD Rates

Here are top public sector bank FD rates, as collated by Paisabazaar.com.

Interest Rates (% p.a.) for Fixed Deposits by Bank

Bank Name	Highest Slab	1-Year Tenure	3-Year Tenure	5-Year Tenure
Bank of Baroda	6.60%	6.50%	6.50%	6.40%
Bank of India	6.70%	6.50%	6.25%	6.00%
Bank of Maharashtra	6.70%	6.20%	6.20%	6.10%
Canara Bank	6.60%	6.50%	6.50%	6.50%
Central Bank of India	7.00%	6.60%	6.50%	6.50%
Indian Bank	6.90%	6.10%	6.25%	6.00%
Indian Overseas Bank	6.75%	6.60%	6.30%	6.30%
Punjab & Sind Bank	6.80%	6.10%	6.00%	6.10%

Top NBFC FD Rates

Here are top NBFC FD rates, as per Bankbazaar.com.

NBFC Fixed Deposit Interest Rates

NBFC Organisation	Interest Rate for 1 Year	Interest Rate for 3 Years	Interest Rate for 5 Years	Tenure Range
ICICI Home Finance	7.00% to 7.25%	7.40% to 7.65%	7.50% to 7.75%	12 months to 120 months
Bajaj Finance Ltd.	7.60%	7.70% to 8.00%	8.30%	12 months to 60 months
HDFC Ltd.	7.40%	7.00%	7.00%	12 months to 120 months
LIC Housing Ltd.	7.25%	7.75%	7.75%	12 months to 60 months
Manipal Housing Finance Syndicate Ltd.	7.95% to 8.25%	7.95% to 8.25%	7.95% to 8.25%	12 months to 60 months
Mahindra Finance	7.75%	8.05%	-	12 months to 60 months
PNB Housing Finance Ltd.	7.45%	7.75%	7.60%	12 months to 120 months