Bajaj Finance: Drawing interest through better rates

The firm offers FD interest rates at least 100 bps higher than those of most private banks

The fixed deposit schemes of non-banking finance companies tend to offer higher interest rates than those offered by banks. Of course, the risks are a tad higher in NBFC deposits, given that they are not insured (bank deposits of up to ₹1 lakh are insured).

In this regard, Bajaj Finance’s FD offers a good blend of higher interest rates and a fairly high degree of safety as seen from the ratings given by agencies and the company’s robust financials.

The FD is rated FAAA by CRISIL and MAAA by ICRA, indicating the highest degree of reliability with regard to interest and principal repayment.

The company offers FDs with tenures ranging from 12 to 60 months. Interest rates are fairly attractive, especially for longer tenures — 8.5 per cent for 36-60 months.

The interest rates on offer from Bajaj Finance FD is at least 100 basis points higher than what most private banks give and over 150 basis points more than the rates of public sector bank deposits.

 

For the buckets of 12-23 months and 24-35 months, the interest rates are 8 per cent and 8.15 per cent, respectively.

For seniors

Senior citizens will get an additional 0.35 per cent, ie, 8.85 per cent for deposits of 36 months or higher. This rate is higher than what is offered by the post office senior citizen savings scheme (SCSS) on a pre-tax basis. Senior citizens who have exhausted the SCSS limit can consider Bajaj Finance FD.

Investors can chose from two options — cumulative and non-cumulative. For those looking for regular payouts, there are monthly, quarterly, half-yearly and annual options (at varying rates).

Depositors can consider locking in for 36 months as rates are quite attractive in that bucket through the cumulative option. The rate for annual interest payout for this tenure is also 8.5 per cent, making it attractive for those who need regular income from the deposit. There are monthly, quarterly and half-yearly interest payout options as well.

Depositors who do not need regular interest payout can opt for the cumulative option to gain from the benefits of compounding.

Bajaj Finance has assets under management of ₹93,197 core as of June 2018.

The provisioning coverage ratio is robust at 74 per cent and net NPA is fairly healthy at 0.37 per cent.

The minimum investment size for Bajaj Finance FD is ₹25,000. The deposit interest will be fully taxable at the slab rate of the depositor. In the case of companies offering deposits, 10 per cent tax is deducted at source if the interest amount exceed ₹5,000 a financial year.

For existing fixed-deposit or loan customers, the company offers an additional interest of 25 basis points.

Investors looking to open deposit accounts with Bajaj Finance can do so online or offline. There is a provision for paying the FD amount via net banking. Keep your KYC (know your customer) documents such as PAN, address proof, etc, ready for a smooth on-boarding process.

 

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