While the falling interest rate on bank fixed deposits are worrying investors some of the corporate are offering up to 250 basis points higher interest rate on their fixed deposits. Non Banking Finance Company (NBFC) Shriram City Union Finance has launched fixed deposit scheme that offers up to 8.4% annual interest to the general public and up to 8.80% to senior citizens. Named as Shriram City Fixed Deposit Scheme, it comes with two interest-paying options- cumulative and non-cumulative. In the non-cumulative option, interest will be paid regularly at the rate of 8.4% to the general public, while the senior citizen investors will get 0.4% higher interest or 8.8% interest. Meanwhile, in the cumulative option, where interest will be paid at the time of maturity, an interest rate of 8.09% will be offered to investors below the age of 60 years, while the senior citizen investors will get 0.4% more at 8.49%.
The good thing here is that interest gets compounded on a monthly basis. So the 5-year cumulative option of the scheme will give an effective yield of 9.04% to the general public and 10.53% to the senior citizen. Credit rating agency ICRA has given MAA+ rating to this FD scheme, which implies the company is unlikely to default on the payment of interest and principal. Shriram City Union Finance is a deposit accepting NBFC. It raises capital through market borrowings and fixed deposits from the public to use it for lending purposes. the company offers multiple loan products like business loans, two-wheeler loan, home loan, personal loan and loan against gold. Worth mentioning here is that corporate fixed deposits are much riskier than bank fixed deposits this is the reason why you get higher interest in a corporate FD. So it is advisable to discuss with your financial advisor before investing in any corporate FD.