Shriram Transport Finance has come up with its third tranche of NCDs in this financial year and will be paying 9.7 per cent interest. The NCDs will be open for subscription from 7th Jan 2019 to 31st Jan 2019. NCDs are fixed return instruments that aim to pay you a regular return, either monthly, quarterly or annually, on your instruments. Broadly, Shriram Transport Finance has three options - monthly, annual and cumulative. It comes with the tenure of 3 to 10 years and an effective yield of 9.39-9.7 per cent. Shriram Transport Finance NCDs are available in dematerialized form only with the minimum investment of Rs 10,000. Should you invest in it? Though returns of these NCDs are attractive, "one should not engage more than 20 per cent of their overall portfolios in company deposits,\u201d says Anil Rego, founder, and CEO, Right Horizons. He further adds, \u201cOf one's portfolio, around 3 per cent should be invested in one company. However, in the NCDs offered by Shriram Transport Finance, investors can invest up to 2 per cent of their overall portfolio.\u201d Before investing in NCDs, there are certain things that should be looked at. For instance, it's credit ratings. Credit rating agencies indicate companies with AAA-rated instruments are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry the lowest credit risk. Shriram Transport\u2019s NCD comes with a slightly lower credit rating of \u2018AA+\/Stable\u2019 by rating agency Crisil. According to Crisil\u2019s website, \u2018AA+\/Stable\u2019 rating means instruments that \u2018have a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.' According to Shriram Transport Finance NCD\u2019s offer document, its credit rating for this issue is the same as that of the NCDs it came out within the past three years; \u2018AA+ The rating, however, has gone up slightly as compared to its NCD that it had offered in the year of 2015. High credit ratings in an NCD indicate the company\u2019s ability to pay timely interests. Most investors who invest in NCDs look for regular and assured income. It helps if the company is able to meet their interest commitments. NCDs generally offer rates higher than bank fixed deposits of similar tenures. At present, SBI is offering 6.75 per cent interest on its five-year fixed deposit whereas depending on the lock-in period NCDs offer a return of 8-12 per cent. By allowing investors with the option to lock into better interest rates for longer periods, NCDs offer the advantage of overbank deposits. Most investors go in for FDs mostly because of the easier access and relatively 'on demand' liquidity they provide. NCDs are listed on the BSE and NSE, though they also provide liquidity over a longer tenure.