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With the festive season already upon us, now is a great time to plan your investments and safeguard your financial health. This means assessing your risk appetite and adding investments to your portfolio.

As the stock market continues to display volatility, returns from fixed-income investments such as a fixed deposit (FD) are more likely to be constant. This makes FDs an essential part of your portfolio.

They offer safe returns as your earnings are not linked to the market. However, this does not mean that any fixed deposit will do. As an investor, plan your fixed deposit investment diligently to earn safe and high payouts. To optimise your returns, choose an FD that offers high security. This is where FD ratings come into play.

For fixed deposits, the Investment Information and Credit Rating Agency of India (ICRA) and Credit Rating Information Services of India Limited (CRISIL) are reputable bodies that assign ratings. Let's learn a little more about them.

What are ICRA and CIRSIL ratings?

While the interest rate is perhaps the first thing that catches your eye when choosing the fixed deposit issuer, it is also important that you pay attention to the security ratings.

ICRA and CRISIL are some of the oldest credit agencies in India and they rate both long-term and short-term investment options such as fixed deposits and hybrid capital instruments. They observe a specific ranking system and consider several metrics while rating an instrument.

Agencies consider many factors like liquidity, maturity profile, renewal rates, and the granularity of the FD program to rate the FDs offered by different banks, NBFCs or private companies.

Here are the rating parameters and steps as per ICRA and CRISIL.

 ICRA's medium-term rating scale used for public deposits

Check the rating parameters and steps as per ICRA
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Check the rating parameters and steps as per ICRA

Here are the CRISIL ratings for a fixed deposit

Find out the rating parameters and steps as per CRISIL
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Find out the rating parameters and steps as per CRISIL

Both ICRA and CRISIL also assign plus (+) or minus (-) modifiers to the ratings to indicate relative ratings. These signs reflect the comparative standing of the rates within the category.

Why is this rating necessary?

Before assigning a rating, agencies such as ICRA and CRISIL do a thorough background check on the instrument and/or company. As per RBI guidelines, high ratings on an instrument ensure that your money is secured.

The company and the instruments are assessed regularly; hence it is necessary to know the current rating before investing. For instance, a company may have scored a high rating earlier but have been altered to a lower rung recently, owing to a default. In this case, if you still invest as per the old rating, you are likely to route your funds to an unsafe instrument. A high rating means there is minimum chance of bankruptcy. So, it is wise to invest in a company with the highest stability rating, like Bajaj Finance, to ensure your money is never at risk.

Grow your wealth risk-free with the Bajaj Finance FD

Bajaj Finance bags ICRA’s highest MAAA rating and CRISIL’s highest FAAA rating, making it one of the most trustworthy and safest NBFCs offering FD. Over thousands of customers have invested in Bajaj Finance Fixed Deposit and have gained assured returns. Non-senior citizens can earn up to 6.50% interest rate on their deposit and gain an additional 0.10% benefit for booking FD online. Senior citizens can earn up to 6.75% interest rate on their investment. We offer additional benefits like pre-approved offers and FD renewal at one click for easy investment.

Additionally, Bajaj Finance is the only Indian NBFC to earn BBB's international rating from S&P Global. Make the most of this high interest rate and invest online now and see your wealth grow safely.

Disclaimer: This content is distributed by Bajaj Finserv. No HT journalist is involved in creation of this content.

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