The Hindu Business Line : Cholamandalam FD, a safe investment

Cholamandalam Investment: Investment in the one-year fixed deposit programme of Cholamandalam Investment & Finance Company can be considered. The company offers 6 per cent with interest being paid either quarterly or annually. For monthly interest payments, the minimum period of investment is three years, which, however, can be avoided. Cholamandalam is one of the safer investment options in the NBFC arena. The rate of interest is also attractive compared to other investment options such as bank term deposit and is only 0.25 percentage points lower than that of Post Office Term Deposit. Premature withdrawals before three months are not allowed. Withdrawals after three months also suffer penalty in the form of a reduction in the contracted interest rate. For withdrawals between three and six months, no interest will be paid. For withdrawals after six months, the interest paid will be only 4.5 per cent.

Shriram Investments: Investments can be considered in the high-yielding fixed deposit and debentures schemes of Shriram Investments. The company offers 7.75 per cent for a three-year cumulative fixed deposit and 8.40 per cent for a three-year cumulative debenture. It also offers 7.50 per cent for a three-year non-cumulative fixed deposit and 8 per cent on three-year non-cumulative debenture. The offer is attractive and the risks are now lower considering the business growth and the capital infusion made in recent years.

Repco Bank: Investments in the fixed deposits of Repco Bank can be considered. The bank offers 6.75 per cent for one- to three-year deposits and 7.50 per cent for deposits for periods beyond three years. The higher rate compared to that offered by public sector banks is attractive considering the risk profile. The Government of India holds a 47-per cent stake in the bank and the Governments of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka hold the rest. The bank is registered as a co-operative society and is governed by the Ministry of Home Affairs.

First Leasing: Investments in the three-year fixed deposit of First Leasing can be considered. The company offers 8 per cent for a three-year tenure, one of the higher rates offered by established finance companies. The company is in reasonably good shape financially. Its debt-equity ratio of less than five offers investors higher level of safety. The profit growth record is also impressive with the company showing higher profits in nine out of the past ten years. In each of the past ten years, the return on net worth has been above 15 per cent. The proportion of bad loans is also quite low, at less than 1 per cent, and its capital adequacy of about 24 per cent offers scope for business expansion.

Srei Infrastructure Finance: Investments in the one-year fixed deposit programme of Srei can be considered. The company offers 7.25 per cent for a one-year cumulative term deposit. The interest rate is attractive considering that housing finance companies and banks offer rates that are lower by more than one-percentage point. In addition, from this financial year, interest from deposits in banks and housing finance companies will not enjoy the protection under Section 80-L of the I-T Act. Srei is a fast growing non-banking finance company specialising in infrastructure project financing which has attracted equity investments from international institutions such as IFC of Washington and FMO of the Netherlands. The company boasts of strong capital adequacy and has also low incidence of bad loans. The FD programme is ideal for investors with one-year investment horizon.

City Union Bank: Senior citizens can consider investing in the short-term deposits of City Union Bank. The bank offers 6 per cent for deposits maturing in six months, 7 per cent for one year and 7.50 per cent for two- and three-year tenures. The rates offered are competitive and are higher than what that on post office time deposits. Deposit insurance for deposits of value less than Rs 1 lakh made in scheduled commercial banks make the scheme even more attractive. Deposits for terms beyond three years however can be avoided. Small savings schemes are more attractive for such deposits.

More Stories on : Fixed Deposits | Fixed Deposits

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page