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Business News/ Money / Personal Finance/  High FD interest rates: Term deposits by corporate offer up to 8%
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High FD interest rates: Term deposits by corporate offer up to 8%

Evaluate credit ratings of issuers, align tenure with financial goals, compare interest rates, and diversify portfolio when investing in corporate fixed deposits for optimal returns.

These corporate fixed deposits offer the highest interest ratesPremium
These corporate fixed deposits offer the highest interest rates

If you are looking for higher interest rates on fixed deposits (FDs), corporate fixed deposits from non-banking financial companies (NBFCs) and housing finance companies (HFCs) can be seen as an attractive option. These deposits offer higher returns when compared to major private and public sector banks. However, it is crucial to assess the risks involved before investing.

A key method to evaluate the risk is by examining the credit ratings assigned by rating agencies such as CRISIL, ICRA, and CARE. These agencies evaluate the financial health of the NBFC or HFC issuing the corporate FDs, and their ratings reflect the likelihood of default on interest and principal repayments.

Also Read: With guaranteed returns, do FDs offer a good investment bet to investors? Experts answer

Higher-rated corporate FDs are generally safer, with lower chances of defaults. Therefore, it's important for depositors to carefully study these ratings to make informed decisions.

Here are some corporate fixed deposits that currently offer the best interest rates:

Company nameCredit rating                                     Interest Rates (p.a.)Additional interest rate for senior citizen
  Highest rate slabApplicable tenure

1-year

tenure

3-year

tenure

5-year

tenure

 
Shriram Finance*ICRA - AA+/Stable
IND AA+/Stable by India Ratings and Research
8.4750 months and 5 years7.59%8.38%8.47%0.50%
Mahindra FinanceCRISIL - AAA/Stable   
India Ratings - IND AAA/Stable
8.13 years and 5 years7.50%8.10%8.10%0.25%
Manipal Housing Finance Syndicate Ltd.ACUITE - ACUITE A8.251 year, 2 years and 3 years8.25%8.25%7.75%0.25%
PNB Housing Finance Ltd.CRISIL - AA/Positive
CARE - AA+/Stable
7.8536-47 months7.45%7.85%7.65%0.20%-0.30%
Sundaram Home FinanceCRISIL - AAA/Stable
ICRA - AAA/Stable
7.94 years and 5 years7.45%7.75%7.90%0.35%-0.50%
Muthoot Capital Services LimitedCRISIL - A+/Stable8.385 years7.21%8.07%8.38%0.50%
ICICI Home FinanceCRISIL - AAA/Stable
ICRA - AAA/Stable
CARE - AAA/Stable
7.653 to less than 5 years7.25%7.65%7.60%0.25%
Can Fin Homes Ltd.ICRA - AAA/Stable7.53 years6.50%7.50%6.75%0.25%-0.50%
Bajaj Finance LimitedCRISIL - AAA/Stable
ICRA - AAA/Stable
8.642 months7.40%8.10%8.10%0.25%
LIC Housing Finance Ltd.CRISIL - AAA/Stable7.753 years and 5 years7.25%7.75%7.75%0.25%
*At Monthly Rests. Additional interest of 0.25% p.a on all renewals, where the deposit is matured. Additional interest of 0.10% p.a. for women depositors.

Source: Paisabazaar, data as on 22nd May 2024

Factors to consider before investing in corporate fixed deposits

When investing in corporate fixed deposits, it is essential to consider several key factors to make informed decisions. First and foremost, check the credit rating of the issuer, as choosing corporate FDs from companies with high credit ratings minimises credit risk.

Also Read: Want to deposit money for 5 years? These 6 banks offer highest interest rate on long term fixed deposits

Next, think about the tenure of the fixed deposit and ensure it aligns with your financial goals to match your investment period with your future financial needs. Comparing interest rates and payout frequencies among different companies is crucial to select the best return that suits your requirements.

Additionally, you may check if there is any lock-in period before investing, particularly if you might need access to your funds before maturity. Be mindful of the tax implications, especially if you are in a higher tax bracket, since the interest earned is taxable and can affect your net returns.

Also Read: Income tax return (ITR) filing 2024: How to show accrued interest on bank fixed deposits (FDs)?

Lastly, consider diversifying your portfolio by investing in a mix of corporate FDs and other low-risk instruments to manage risk effectively. By keeping these factors in mind, you can achieve a balanced approach to your investments while maximising potential returns.

 

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ABOUT THE AUTHOR
Deepika Chelani
A business media enthusiast. She covers personal finance beat for LiveMint.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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Published: 24 May 2024, 10:14 AM IST
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