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Fixed deposits being a safer investment avenue, the interest rate offered on it, in the current scenario can be a disappointing factor. The repo rate cut down by the Reserve Bank of India (RBI) has become an affecting factor for this. Although these economic changes have gained the home loan buyers, it is not favourable to the investors. A few years back, banks offered an interest rate which was more than 8%, which is not the current situation. However, you can still earn a higher returns in comparison to banks, by investing in Non-Banking Financial Companies (NBFCs). The fixed deposits (FD) offered by NBFCs are known as company fixed deposits.
Talking about fixed deposit investments, there are many new small banks who are seen to offer a similar interest rate as NBFCs. One such reason behind doing so is to attract investors. Although they offer similar rates, they are not as reliable and safe as NBFCs. Apart from this, schemes and facilities offered by NBFCs are also better than these new banks.
Here is a short comparison which can help you choose a favourable option:
Application process:
The application process offered by NBFCs is quite convenient than that of banks. As these banks are small and new, there are very rare chances that these banks might provide online access. Apparently, if you plan to invest in company’s FD, you cannot apply for it online but also can check the returns without visiting the NBFC. Also, the process is pretty fast wherein you don’t have to wait for many days.
Withdrawal and deposit:
Company fixed deposit has a steady requirement when investments are concerned. The minimum deposit amount for NBFCs is INR 25,000 where in a person having a low amount can also be invested. It is not obligatory to invest a huge amount when it comes to company fixed deposits. Besides this, if you are planning to break your FD and withdraw funds, the money can be liquidated faster than banks. Which is good if you are in urgent need of funds.
Stability:
Many believe that NBFCs are not as trustworthy as banks, which is completely not true. When safety and reliability are concerned, NBFCs are seen to prove themselves as they are awarded by ICRA’s MAAA rating and CRISIL’s FAAA rating. Whereas, the risk factor is more when it comes to new banks, as they have no background to trust on.
Additional benefits:
Here are some additional benefits offered by NBFCs, when it comes to fixed deposits.
- The company fixed deposits are considered more flexible in terms of credit score.
- Offers monthly pay-out option.
- Offers fixed deposit calculators, wherein, investors can calculate their returns based on the interest amount, interest rate and tenor.
- Provides flexi deposits, which adds in the liquidity feature.
- Higher interest rates on senior citizen fixed deposit.
Concluding with, fixed deposits offered by NBFCs can be a good place to invest in; if you are planning for investment. Although new small banks offer similar interest rates in comparison to NBFCs, they still lack the credibility. You cannot trust on banks which are newly established and have no background to look upon. Whereas, company fixed deposits are offered by corporate companies which can be trusted as they are in the market since many years.
