Fixed Deposit rate better than PPF, SCSS, NSC, SSY: This FD offers upto 8.75% interest – should you invest?

Corporate Fixed Deposit interest rate: Shriram Transport Finance Company Limited (STFC), a part of the Shriram Group, today announced a hike in its corporate fixed deposit rates by 25 to 50 basis points.

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Shriram Transport Finance Company Limited (STFC), a part of the Shriram Group, today announced a hike in its corporate fixed deposit rates by 25 to 50 basis points (0.25% p.a. to 0.50% p.a.) across different tenures. In a statement, STFC said that customers can earn interest up to 8.25% on Fixed Deposits effective from Aug 10, 2022. The 8.25% interest is applicable on 60-month FDs.

For FDs of up to 3 years and 4 years, STFC is offering 8% and 8.15% interest rates respectively. For one year FD, the revised interest rate is 6.75% and it is 7.25% for a two-year fixed deposit.

STFC offers an additional interest of 0.5% per annum to Senior Citizen depositors. That means senior citizens can get 8.75% interest on a 5-year fixed deposit. An additional 0.25% interest per annum will be paid on renewals where the deposit is matured, the company said in a statement.

The 8.75% interest offered by STFC fixed deposit is higher than the current interest rates offered on small savings schemes like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC) and the Senior Citizen Savings Scheme (SCSS).

STFC is a 42-year-old company and part of the Shriram Group, which is one of the largest asset financing NBFCs in India. The fixed deposit schemes offered by NBFCs are also called corporate FDs or company deposits, which are investment avenues offered by financial companies.

Should you deposit?

Readers should take note of the fact that STFC is not a regular bank. Hence the Fixed Deposits offered by NBFCs don’t come with the same benefit as the one offered by regular banks. In the case of banks, there is a deposit insurance guarantee of Rs 5 lakh. That means depositors will get back up to Rs 5 lakh even when the bank fails. But the same benefit doesn’t apply in the case of fixed deposits offered by NBFCs.

“Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks,” says RBI on its website.

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While STFC is a stable organisation and its FDs are rated “Stable” by ICRA and India Ratings and Research, depositors should do proper research, or get advice from their financial planners before investing.

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