Corporate fixed deposits offer higher interest rates on fixed deposits in comparison with public sector banks and major private sector banks. But unlike bank FDs, the Deposit Insurance and Credit Guarantee Corporation (DICGC) does not cover corporate FDs with deposit insurance of Rs 5 lakh. In September, the Reserve Bank of India (RBI) announced a massive hike of 50 basis points (bps) in repo rate. This was the fourth consecutive repo rate increase in this financial year. With the latest round of rate hike, the cumulative rise since May 2022 now stands at 190 bps. In this scenario of increasing repo rates, leading non-banking financial companies (NBFCs) and housing finance companies (HFCs) have hiked interest rates on their fixed deposits.
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The depositors should carefully go through the ratings assigned by agencies like ICRA, CRISIL, and CARE while choosing corporate FDs. These ratings are assigned on the basis of agencies’ assessment of the financial health of the NBFC or the HFC offering corporate FDs. Higher-rated corporate FDs have lower chances of defaulting on interest and principal repayments. Here are some corporate FDs that give the best interest rates.
Shriram Transport Finance Co Ltd gives an interest rate of 7.76 per cent per annum (at monthly rests) on cumulative FDs opened for a 3-year tenure. Hence, a cumulative FD of Rs 10,000 opened for a 3-year tenure will amount to Rs 12,513 on the maturity date. This NBFC also gives an additional interest of 0.25 per cent per annum on renewals of matured deposits. The India Ratings and Research (Ind-Ra) has given a credit rating of AA+/Stable to this NBFC. According to the rating agency, AA+ implies a high degree of safety regarding timely servicing of financial obligations and carries very low credit risk. Credit rating agency ICRA has also assigned the credit rating of AA+/Stable to this NBFC. According to the ratings agency, AA+ rating means high credit quality with low credit risk for the depositor.
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PNB Housing Finance Ltd. offers 7.55 per cent interest per annum (compounded annually) on cumulative FDs opened for a 3-year tenure. Hence, a cumulative FD of Rs 10,000 opened for a 3-year tenure will amount to Rs 12,440 on the maturity date. Credit rating agency CRISIL has given the credit rating of FAA+/Negative to this HFC. According to this rating agency, FAA implies strong chances of timely interest and principal repayment by the HFC. Credit rating agency CARE has given the credit rating of AA/Stable to this HFC. According to CARE, an AA rating means a high degree of safety regarding timely servicing of financial obligations and indicates very low credit risk for the depositors.
Some of the other companies offering a higher interest rate are:
- Shriram City Union Finance Co Ltd is giving an interest rate of 7.76 per cent per annum on cumulative FDs of 3-year tenure.
- Bajaj Finance Ltd. provides an interest rate of 7.40 per cent per annum on cumulative FDs with a tenure of 3 years.
- LIC Housing Finance Ltd is offering an interest rate of 6.95 per cent per annum (compounded annually) on cumulative FDs of a 3-year tenure.
- HDFC Ltd. offers 6.85 per cent interest rate per annum (compounded annually) on cumulative FDs of a 3-year tenure.
