FD Watch. 4 fixed deposit schemes for regular income

The RBI’s move to cut policy rates — repo and reverse repo — by 25 basis points recently has brought some cheer to borrowers and India Inc.

But this is not good news for conservative investors who have traditionally placed their faith in debt schemes such as fixed deposits, be it for regular income or for parking their surplus. And what’s more, the RBI is expected to cut rates further over the next few months.

The downtrend in interest rates that started in 2015 may well continue for some time. So, if you are a conservative investor looking to earn regular income, it may be a good time now to lock into fixed deposit schemes offering interest payouts.

Given that rate cuts are not yet over, a tenure of one to three years will be ideal to tide over reinvestment risk as well. Even as most banks and financial institutions have already followed suit and reduced their deposit rates, some attractive opportunities still left. Here are the top four fixed deposit schemes across banks, corporates and non-banking finance companies whose interest rates are among the highest offered currently.

Dewan Housing Finance offers Aashray Deposit Scheme to individuals. The interest rate for two-year non-cumulative FDs of up to ₹50 lakh is 8.5 per cent.

For senior citizens, widows, armed forces personnel and DHFL home loan/mortgage borrowers, it offers an additional 0.25 per cent — that is, 8.75 per cent.

An additional 0.25 per cent is given on deposits exceeding ₹50 lakh. The interest payout in this case will be annual. The scheme has been rated AAA (highest safety) by rating agency CARE and FAAA by Brickwork. The minimum investment is ₹2,000, and then in multiples of ₹1,000.

Kolkata-based private sector bank Bandhan Bank offers 8.25 per cent on deposits of up to two years. If you are a senior citizen of 60 years and above, the bank offers an additional 0.5 per cent; so your annual interest rate will be 8.75 per cent.

Commencing operations in December 2014, the bank has 713 branches across the country and is a subsidiary of Bandhan Financial Holdings. The attractive rate may be viewed in light of Bandhan being a new entrant in the banking space and its efforts to ramp up its deposit base.

You can choose to receive your interest every month or at the end of the quarter. The minimum investment is ₹1,000 and in multiples of ₹1 thereafter.

Chennai-based non-banking financial company Shriram City Union Finance offers 8.1 per cent on its two-year non-cumulative fixed deposit scheme.

The company accepts deposits in multiples of ₹1,000, subject to a minimum of ₹10,000. If you opt for a three-year tenure scheme, the interest rate is higher at 8.25 per cent.

For senior citizens the company offers an additional 0.25 per cent. The deposit is rated AA+ by CARE, implying high safety. For these rates of interest, the payout will be yearly.

The recently listed Kolhapur-based RBL Bank, which is also one of the oldest private sector banks, offers attractive rates on its two- and three-year deposit schemes. The interest rate on deposits of up to ₹1 crore for less than two years stands at 8 per cent. The minimum investment is ₹10,000.

If you wish to park your money for a longer duration of, say, over two years but less than three, the rate is 8.25 per cent. For senior citizens, the bank offers 0.5 per cent additional return across all time periods. The interest will be paid at the end of every quarter.

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