Money won’t grow in your mattress.
It will grow in a Fixed Deposit!
Money won’t grow in your mattress.
It will grow in a Fixed Deposit!
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    How to choose the best FD scheme

    Fixed deposits are offered both by banks and companies or corporates, also called as NBFCs (Non-Banking Finance Companies). Corporate fixed deposit schemes offer higher rates of interest compared to bank deposits. Companies offer fixed deposits at attractive interest rates to raise capital.

    How to choose a good company deposit scheme?
    • Check the promoters' history, company's repayment record and balance sheet among others. In some cases, a company with a low credit rating is more likely to offer higher rates to attract investors.
    • Investors should avoid companies which offer more than 15% interest rate, companies not paying regular dividends to the shareholder besides partnership firms since it is difficult to ascertain their performance.
    • Investors should stay away from unrated deposit schemes by small manufacturing companies. Only 'A' rated NBFCs are eligible to accept deposits as mandated by RBI. Investors should look for AA or AAA rated companies with enjoy good reputation.
    • Longer the duration of investment, higher is the rate of interest offered. But you should be cautious about investing for a longer duration. It is more advisable to make shorter deposit of around 1 year to 3 years to monitor company's rating and servicing.
    • Experts suggest diversification and investing in several good schemes rather than in just one scheme.
    • Investors should analyze the servicing standards of the company and consult the investment advisor for all transactions.
    • Investors should not only review a company’s profile but also its ratings. Ratings are given by credit rating agencies such as ICRA, CRISIL and CARE
    • Investors should also examine the lock in period of the deposit. Most deposit schemes have an initial lock-in of three to six months.
    • Investors should be wary of default risk, i.e, at maturity, companies may not return the amount and default (owing to bad performance and recession among others).
    • While bank deposits are secured by RBI, company deposits have no such back-ups and are, therefore, unsecured.
    Top rated company deposit schemes in India

    Some of the top rated company deposit schemes are as follows:

    • Mahindra Finance Fixed Deposit
    • Mahindra and Mahindra Financial Services Ltd, a subsidiary of Mahindra and Mahindra group is a Non Banking Financial Company (NBFC) rated “FAAA” by CRISIL. Minimum investment for a fixed deposit is Rs.10,000.

    • Dewan Housing Finance Corporation Ltd (DHFL)
    • Incorporated in 1984, schemes offered by DHFL are rated as FAA+ by CARE. Minimum investment for a Fixed deposit of DHFL is Rs.10,000.

    • Shriram Transport Finance Company (STFC)
    • Established in 1979, STFC, subsidiary of Shriram Group, is rated as TAA by FITCH. Minimum investment for a Fixed deposit of STFC is Rs.25,000.

    • PNB Housing Finance
    • Rated FAA+, PNB Housing Finance demands a minimum investment of Rs. 20,000 for a fixed deposit scheme.

    The following table shows details of the top rated corporate fixed deposits
    Company Rating Period Rate of InterestAnnual Yield Senior citizen
    Mahindra Finance FAAA by CRISIL12 months 9.25%9.25%9.50%
    DHFL FAA+ by CARE12 months 9.50%9.72%9.90%
    Shiram TAA by FITCH12 months 9.25%9.25%9.50%
    PNB Housing Finance FAA+ 12 months 9.50%9.73%9.75%
    Bank fixed deposits

    Bank fixed deposits, one of the most sought-after savings schemes for millions of investors in India, offer higher rates of interest than savings bank accounts. The rates of interests for fixed deposits vary depending on the bank. Bank fixed deposits are regulated by RBI, which guarantees up to Rs. 1 lakh against insolvency of the bank. Bank fixed deposits typically offer lower interest rates compared to corporate fixed deposits but provide assured returns.

    How to choose a good bank deposit scheme?
    • Unlike corporate fixed deposit schemes, bank fixed deposits schemes are not dependent on ratings.
    • Experts suggest sticking to PSU banks or select private sector banks for safe returns.
    • Investors should consider several parameters such as maturity amount, interest, interest after tax and inflation-adjusted returns among others.
    • You need to zero in on the amount to be held in a fixed deposit in addition to the deposit period.
    • Different banks offer varied interest rates and tenure. Investors need to make a comparative analysis prior to depositing money in a fixed deposit.
    • You have to study the premature withdrawal clauses which vary from bank to bank.
    • Different banks offer several fixed deposit schemes such as the following
    IDBI Bank
    Product Name Rate of Interest Annual Yield Tenure Minimum Balance
    Fixed Deposit – Senior Citizen8.00%8.00%1100 days Rs. 10,000
    Fixed Deposit – NRO7.50%7.50%1100 days Rs. 10,000
    State Bank of Travancore
    Product Name Rate of Interest Annual Yield Tenure Minimum Balance
    Term Deposit – Senior Citizen 8.00% 8.20% 400 days Rs. 5,000
    Term Deposit 7.50%7.71% 400 days Rs. 1,000
    Top banks offering high interest rates on FDs

    The table below shows high interest rates offered by some banks on fixed deposits

    Name of the bank Duration Rate of interest
    Catholic Syrian Bank400 days9.10%
    Tamilnad Mercantile Bank Ltd5 to 10 years9%
    Lakshmi Vilas Bank900 days9%
    DCB Bank 24 to 36 months8.90%
    Yes Bank21 months 10 days to 21 months 20 days8.5%
    Central Bank of India 3 to 5 years8.5%
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