Get The Best Fixed Deposit Rates: Bank vs. NBFC

Fixed Deposit

People employ financial planners as a means to make their income in the best of investment options and earn higher and higher. As an alert and cautious investor, it is not a difficult task to track the FD rates in India and compare the various fixed deposit interest rates. While the traditional practice has been to invest in deposits of various banks, you need to be aware of the high rates being provided by NBFCs and how can you earn from them.

Let us look at the various differences between bank and NBFCs and how you can get the best fixed deposit rates –

  1. Cost of funds – As a business model, the funds available with NBFCs are more expensive than with banks. Banks collect through various retail deposits while NBFCs have 40-50% of their funds from banks and a large chunk from the debt market. Thus, the cost of funds for NBFCs is high and the cost management of the NBFC shows a major achievement if it can still offer high interest rates to its depositors.

  1. Tenor – Banks offer tenor from 7 days to 10 years for fixed deposits whereas NBFCs offer tenor options ranging from 12 months to 60 months. Few of them go up to 10 years. Thus, with a lower window to compound, the interest rate offered by NBFCs is higher.

  1. Flexibility with SDP – Bajaj Finance offers its customers a flexible investment plan such as Systematic Deposit Plan (SDP) wherein you can create an FD with small monthly deposits starting from Rs. 5000 per month. You can decide the number of deposits in a given tenor from 6 to 48. This is a great way to earn good returns while also taking care of your expenses. Banks do not allow any such option.

  1. Interest Rates – Bajaj Finance offers a high interest rate of up to 8.05% especially if you are a senior citizen. Returning customers and Bajaj employees can also avail an additional interest rate benefit.

  1. Return on Investment – Using the online FD calculator, check the returns over a period of time that you can garner. You can easily earn more than 40% ROI over a 5-year period even if the stock market is highly volatile.

Customer type

Interest rate

Interest amount

Growth in savings

New customer 7.80% Rs. 45,577 45.57%
Existing customer 7.90% Rs. 46,254 46.25%
Senior citizen 8.05% Rs. 47,273 47.27%
  1. Payouts – Decide your payouts depending upon your needs and financial goals. If you have monthly, quarterly or bi-annual needs for funds, choose for such payouts. Otherwise, you can let the investment grow each year and receive it on maturity.

While bank FDs are guaranteed up to Rs. 1 lakh per depositor by the central bank, you can easily look up the tough and stringent credit ratings that NBFCs need to earn. Bajaj Finance Fixed Deposit has the highest safety ratings of FAAA/Stable by CRISIL and MAAA/Stable by ICRA, so you can get assured returns up to 8.05%.