NBFCs, Small Finance Banks Offer As Much As 9 Percent On Their Fixed Deposit Schemes
When the fixed deposit (FD) interest rates offered by large public sector banks (PSBs) such as State Bank of India (SBI) stay under the range of 6 to 7 percent per annum, the depositors feel compelled to set their sights on an alternative savings option i.e. the fixed deposit (FD) schemes of Non-Banking Financial Companies (NBFCs). It is noteworthy that the NBFCs offer relatively higher interest rates on their fixed deposit schemes, somewhere in the range of 8 to 8.5 per cent. Bajaj Finserv, for instance, offers an interest rate between 8.10 per cent and 8.6 per cent (according to its website bajajfinserv.in), which is nearly 200 basis points higher than the SBI FD interest rates of 6.4 per cent. Similarly, Kerala Transport Development Finance Corporation (KTDFC) offers interest rate upto 8.25 per cent, according to its website (ktdfc.kerala.gov.in).
Interest Rates Offered By Bajaj Finserv On Its Fixed Deposits (FDs)
| Tenor in Months | Minimum deposit size (in Rs.) | Cumulative | Non-Cumulative | |||
| Monthly | Quarterly | Half-yearly | Yearly | |||
| 12 – 23 | 25,000 | 7.60% | 7.35% | 7.39% | 7.46% | 7.60% |
| 24 – 35 | 7.90% | 7.63% | 7.68% | 7.75% | 7.90% | |
| 36 – 60 | 8.10% | 7.83% | 7.88% | 7.95% | 8.10% | |
| Special tenors scheme | ||||||
| 15 | 1,00,000 | 7.70% | 7.45% | 7.49% | 7.56% | 7.70% |
However, only a few NBFCs are allowed by the banking regulator to accept deposits. One can find the list of RBI-recognized NBFC here.The list shows that there are 23 registered NBFCs in Delhi, 27 in Chennai and five in Mumbai.
However, one must understand that the FDs of NBFCs are not as safe as that of PSBs such as State Bank of India (SBI) and some NBFC (especially with low credit ratings) might even skip the interest payments to the depositors. To combat such a scenario, the Reserve Bank of India (RBI) introduced a facility of ombudsman in February this year under the Ombudsman Scheme For Non-Banking Financial Companies, 2018.
Also Read: To Earn Higher Interest Rates, Open SBI Savings Plus Account
The scheme of ombudsman has initially been introduced at the four metro centres of Chennai, Kolkata, Mumbai and New Delhi for handling complaints from the respective zones, so as to cover the entire country. The scheme came into effect from February 23.
There is no denying the fact that the NBFC deposits are relatively riskier than the fixed deposits. But at the same time, they pay higher interest rates as well. To be able to safeguard your principal amount, one can go for high credit-rating NBFCs. The ones with credit rating of A to AAA are safe while the NBFCs with B to BBB are relatively unsafe.
Besides the ratings, one can also consider the duration and security backing of debt instruments. The deposits which are secured are safer while the unsecured deposits are not.
Similarly, the long term deposits are relatively more unsafe because the liquidity and financial condition of NBFC might change in the long run.
Besides the fixed deposits, NBFCs also offer non-convertible debentures (NCDs). For instance, JM Financial announced its public issue that opened on May 28 and will close on June 20. The rate of interest is 9.75 per cent, as per the JM Financial website. To find the difference between NCDs and FDs, one can click here.
Interest Rates Offered By Fincare Small Finance Bank On Its FDs
| Tenure | General Public | Senior citizens |
| 7 days to 45 days | 4% | 4.50% |
| 46 days to 90 days | 4% | 4.50% |
| 91 days to 180 days | 6% | 6.50% |
| 181 days to 364 days | 7% | 7.50% |
| 12 months to 15 months | 8% | 8.50% |
| 15 months 1 day to 18 months | 8.25% | 8.75% |
| 18 months 1 day to 21 months | 8.50% | 9% |
| 21 months 1 day to 24 months | 8.75% | 9.25% |
| 24 months 1 day to 36 months | 9.00% | 9.50% |
| 3 years 1 day to 5 years | 8% | 8.50% |
| 5 years 1 day to 7 years | 7% | 7.50% |
Just as NBFCs, one can also make deposits with the small finance banks that offer as much as 9 per cent per annum as compared to the SBI's FD deposit rates of 6.4 per cent. A fixed deposit fetches an interest rate of 8 per cent in Fincare Small Finance Bank; 8.75 per cent in ESAF Small Finance Bank; 8 per cent in Ujjivan Small Finance Bank; and 7 per cent in AU Small Finance Bank.
