A fixed deposit (FD) is a secure financial instrument in which you can invest a lump sum amount. This facility is offered by banks and Non-Banking Financial Companies (NBFCs) for a fixed tenor.
Over this period, you earn returns on your deposit at a fixed interest rate. An NBFC fixed deposit is also known as a corporate fixed deposit, since it is essentially offered by a company or corporate entity.
Many investors consider NBFC fixed deposits as their preferred mode of investment. If you are an investor with a low tolerance for risk, you can invest in a fixed deposit plan offered by an NBFC to earn guaranteed returns on your investment.
On the other hand, if you have a high tolerance for risk, you can still benefit from NBFC FDs because they make your portfolio more stable. The rates of interest on FDs offered by NBFCs are relatively higher overall than those offered on bank FDs.
That said, NBFC FD rates vary from one company to another. NBFC FD interest rates also remain unaffected by market changes, so you can expect guaranteed returns. You can choose to receive your interest monthly, quarterly, half-yearly, or annually.
Or, you can even choose to reinvest the interest in the fixed deposit and get it at maturity.
If you are interested in investing in fixed deposits offered by Non-Banking Financial Companies, check out some of the top NBFC FDs you can choose from.
PNB Housing Finance is a registered housing finance company promoted by the Punjab National Bank. The bank offers an attractive fixed deposit plan that is rated FAA+/Negative rating by CRISIL and AA/Stable by CARE. Check out the interest rates on the bank’s various FD plans below.
Plan |
Interest Rates (per annum) |
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|
1-year FD |
2-year FD |
3-year FD |
4-year FD |
5-year FD |
Cumulative fixed deposit (up to ₹5 Crore) |
7.35% |
7.00% |
7.70% |
7.40% |
7.50% |
Non-cumulative fixed deposit with annual payout option (up to ₹5 Crore) |
7.35% |
7.00% |
7.70% |
7.40% |
7.50% |
The NBFC FD rates on PNB Housing Finance fixed deposits are higher by 0.25% per annum for senior citizens for investments of up to ₹1 Crore.
Mahindra Finance is a trusted vehicle financing company that has also emerged as a reliable investment provider in recent years. The company’s fixed deposit plans carry the IND AAA or stable rating, as offered by India Ratings. The NBFC interest rates across FD types are as follows.
Plan |
Interest Rates (per annum) |
||||
|
1-year FD |
2-year FD |
3-year FD |
4-year FD |
5-year FD |
Samruddhi cumulative (up to ₹1 Crore) |
7.05% |
7.50% |
7.50% |
7.50% |
7.50% |
Samruddhi non-cumulative with an annual payout option (up to ₹1 Crore) |
7.05% |
7.50% |
7.50% |
7.50% |
7.50% |
Senior citizens get NBFC interest rates that are higher by 0.25% per annum on all the above deposits.
India’s most diversified NBFC, Bajaj Finance also offers fixed deposits that are trusted by investors across the country. Fixed deposits from this NBFC have been awarded a safety rating of AAA or Stable by CRISIL, so you can rest assured that your investments will be safe. Check out the NBFC FD rates below.
Plan |
Interest rates (per annum) |
||||
|
1-year FD |
2-year FD |
3-year FD |
4-year FD |
5-year FD |
Cumulative fixed deposit (upto ₹5 Crore) |
7.40% |
7.55% |
8.05% |
8.05% |
8.05% |
Non-cumulative fixed deposit (upto ₹5 Crore) |
7.16% |
7.25% |
7.77% |
7.77% |
7.77% |
The NBFC FD rates on these fixed deposits offered by Bajaj Finance are higher by 0.25% per annum for senior citizens.
While fixed deposits offered by NBFCs are fundamentally similar to bank FDs in most ways, there are a few points of differences between these two categories of instruments. Let’s take a closer look at how NBFC fixed deposits differ from bank fixed deposits.
Particulars |
Bank Fixed Deposit |
NBFC Fixed Deposit |
Rate of Interest |
Bank fixed deposits generally offer lower rates of interest. |
NBFC fixed deposits offer higher rates of interest than bank FDs. |
Investment tenor |
The investment tenor for bank FDs can range from 7 days to 10 years. |
NBFC FDs generally come with tenor options ranging from 1 year to 5 years. |
Insurance on the FD |
Bank fixed deposits are insured up to ₹5 Lakhs per account as per the RBI’s regulations. |
NBFC fixed deposits do not come with any such insurance coverage. |
Safety |
Bank FDs are generally considered safer than NBFC fixed deposits. |
Fixed deposits by NBFCs come with varying degrees of risks as indicated by their credit rating. |
Tax Benefits |
Interest on bank FDs held by senior citizens is eligible for tax deductions u/s 80TTB up to ₹50,000 per financial year. |
Interest on NBFC fixed deposits does not come with any such tax benefit. |
If you are planning to open an NBFC fixed deposit, here are some things to consider before you do so.
Always compare the NBFC FD rates offered by different Non-Banking Financial Companies to identify the instrument that offers better returns
Always review the lender's credibility to ensure your fixed deposit is safe
Always choose deposits that carry AAA ratings, depending on the agency that rated them
Before opening an FD, ensure the NBFC you choose offers a hassle-free application process and provides good customer service
Choose the FD tenor wisely to avoid penalty charges for premature withdrawal
If you have a surplus amount to invest, you can split it into multiple FDs with different tenors and earn interest for every deposit
Other FD Related Pages |
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Yes, you can book a fixed deposit in an NBFC, just like a bank fixed deposit.
The NBFC FD rates differ from one company to another and can change from time to time. The interest rates are dependent on the FD amount, the investment tenor and the prevailing repo rates. Senior citizens are offered comparatively higher NBFC interest rates on deposits.
The FD interest rates vary from time to time based on changes to the current repo rate and the NBFC’s internal policy and regulations. So, when deciding which NBFC gives the best returns on FDs, different NBFCs may hold the top spot at different points in time. You can check out the NBFC offering the highest FD rates by comparing your options online.
NBFCs decide the interest rate based on factors like their internal policies, profitability, repo rates, etc. That said, NBFC FD rates cannot exceed the ceiling rate set by the Reserve Bank of India.
The rate of interest on NBFC fixed deposits varies from company to company. They also change based on the tenor and the amount of the deposit made.
Yes, the interest you earn from your NBFC fixed deposit is taxable as income from other sources.
Yes, compared to various other market-linked investment options, investing in NBFC fixed deposits provides safe and reliable returns. However, the reliability of the issuer depends on its credit rating. Hence, check out the credibility factor of the NBFC before booking an FD.
The NBFC FD rates vary depending on the RBI regulations and internal policies. As such, the best NBFC for FDs are usually those with both high credit ratings and rates. Ideally, compare the interest rates across different NBFCs along with the credit ratings before choosing a specific issuer.