Interest rates have virtually collapsed over the last few quarters. Large government and private sector banks are offering interest rates around that 5.5 per cent, which is extremely low, when compared to a few years back. Here are 4 fixed deposits that still offer interest rates that are high when compared to banks and relatively safe.
1. Mahindra and Mahindra Financial Services Ltd (MMFSL) Fixed deposits
The fixed deposits from MMFSL offer you an interest rate of 7.20 per cent on a 1-year deposit, 7.30 per cent on a 18-month deposits, 7.60 per cent on a 3-year deposits, 7.70 per cent on a 4-year deposit and 7.80 per cent on a 5-year deposit.
This is a good 1.5 per cent to 2 per cent more than what banks in the country are offering. The deposits are rated as AAA, which means the deposits have a high level of safety. Senior citizens are being offered as in interest rate of 0.25 per cent extra, over and above the rates mentioned. A good deposit for those looking to invest for a more short term period of 1-2 years.
2. LIC Housing Finance Fixed Deposits
This is again a deposit that has been rated as AAA and is backed by a name like LIC. The housing finance company is offering an interest rate of 7 per cent on a 12 month deposit, 7 per cent on a 18-month deposit and 7.10 per cent on a 3-year deposit.
Senior citizens are entitled to an additional interest rate of 0.25 per cent. We suggest that you stay locked for a short duration. In case interest rates rise, you do not want to lock in money for a long period at low interest rates.
It's also important to remember that company fixed deposits are not secured and hence one has to look for safety.
3. Bajaj Finance
Bajaj Finance offers an interest rate of 6.90 per cent for 1-year, while the 2-year deposit fetches an interest rate of 7 per cent and a 3, 4 and 5 year deposit fetches an interest rate of 7.10 per cent. The deposits are from the Bajaj stable and are hence safe.
Senior citizens are entitled to an extra 0.25 per cent over and above the interest rates mentioned. It is important to note that there would be a TDS cut, in case the interest amount exceeds Rs 5,000 every year. The deposits have been rated AAA and are hence relatively secure. Investors, looking for a short duration of 1-2 years could opt for these deposits.
This is one of the oldest housing finance companies and is the promoter of HDFC Bank. The interest rate on a 1, and 2-year deposit is 6.36 per cent, while a 3, 4 and 5 year deposit fetches an interest rate of 6.46 per cent.
The interest rate is not the best when compared to others mentioned above. However, it is still better than bank fixed deposits, where interest rates have fallen dramatically over the last few months.
About the author
Sunil Fernandes has spent 25 years covering business and finance in India and abroad. Sunil has worked with frontline daily newspapers including Hindustan Times, Deccan Herald and Gulf Times. He has also worked with investment magazines like Dalal Street Investment Journal and Oman Economic Review. His forte remains stocks, mutual funds, fixed deposits and tax planning.