In India, Fixed Deposits (FDs) continue to be one of the most popular investment choices among people, driven by their relatively safe returns and predictable income. It has been seen that these deposit schemes have been widely offered by commercial banks, drawing investors due to the stable interest rates and security associated with such institutions. However, in recent years, Non-Banking Financial Companies (NBFCs) have also entered the fixed deposit market, presenting an alternative option for investors seeking higher yields.
While commercial banks usually offer lower FD interest rates due to their well-regulated structures and secure operations, NBFCs often provide a more attractive rate of return. This difference is largely attributed to the heightened ‘credit risk’ associated with NBFCs. Due to the nature of their business, NBFCs carry a higher risk profile compared to traditional banks, which often translates to higher interest rates to compensate investors willing to take on this additional risk.
However, it is worth noting that not all NBFCs offer higher rates. The interest rate depends on various factors, including the NBFC’s credit rating, financial health, and market conditions. Many NBFCs with high credit ratings offer competitive rates that may approach those of commercial banks, aiming to balance the risk-return factor for their investors.
Here’s a list of NBFCs offering high interest rates on FDs
| NBFC Organisation | Interest Rate for 1 year | Interest Rate for 3 years | Interest Rate for 5 years | Tenure Range |
| ICICI Home Finance | 7.00% | 7.40% | 7.50% | 12 to 120 months |
| Bajaj Finance Ltd. | 7.40% | 7.80% | 8.10% | 12 to 60 months |
| HDFC Ltd. | 7.10% | 7.40% | 7.40% | 12 to 120 months |
| LIC Housing Ltd. | 7.25% | 7.75% | 7.75% | 12 to 60 months |
| Manipal Housing Finance Syndicate Ltd. | 7.75% | 7.75% | 7.25% | 12 to 60 months |
| Mahindra Finance | 7.40% | 7.70% | 7.75% | 12 to 60 months |
| PNB Housing Finance Ltd. | 7.35% | 7.70% | 7.50% | 12 to 120 months |
| Muthoot Capital Services Limited | 6.25% | 6.75% | 7.25% | 12 to 60 months |
| Shriram Finance Ltd. | 7.34% | 7.95% | 8.18% | 12 to 60 months |
| Sundaram Finance | 7.45% | 7.75% | – | 12 to 36 months |
Additional benefits to senior citizens on FDs
Non-Banking Financial Companies (NBFCs) in India evaluate several factors when determining interest rates on fixed deposits, aiming to balance investor appeal with sustainable business growth. Key considerations include the current repo rate, internal profitability targets, and organizational policies. Together, these elements shape the interest rates offered, with NBFCs adapting rates in response to economic and market conditions. NBFCs that receive high credit ratings, particularly AAA ratings from reputable agencies like ICRA and CRISIL, are generally regarded as safer investment options. To further attract senior citizens, most NBFCs extend an additional interest rate benefit of 0.25 per cent on fixed deposits.
