Bond Watch. An attractive option for women

The days of high interest rates seem to be drawing to an end, with the general expectation of a lower interest rate regime over the next one or two years. Given this scenario, it may pay to invest your surplus in deposit schemes offering higher interest rates right now.

One such option available for women depositors is Dewan Housing Finance’s ‘Swayamsidha’ Fixed Deposit Scheme.

The deposits, which were earlier rated CARE AA+, recently got upgraded to CARE AAA, which implies the highest degree of safety regarding timely payment of interest and principal. Consequently, investing in them involves the lowest possible credit risk.

The scheme offers the highest return among similarly rated company deposits, as well as bank deposits.

The ‘Swayamsidha’ Fixed Deposits Scheme accepts deposits for a period of 18 months. The scheme has both cumulative and non-cumulative options. The cumulative 18-month deposit offers 10.6 per cent. If you wish to receive regular payouts, the rates are lower, at 10.37 per cent for a monthly interest option.

Senior citizens and existing home loan borrowers with DHFL get an additional 0.5 per cent across all options. You need to invest a minimum amount of ₹10,000 under the cumulative option and ₹20,000 for the monthly interest option.

For deposits more than ₹25 lakh, the scheme offers a higher interest rate of 10.85 per cent under the cumulative option.

The 10.6 per cent interest rate offered is 80-160 basis points higher than offerings from other banks for deposits of the same tenure. The best rate offered by banks for the same tenure is 9.5 per cent.

When compared with other corporate deposits too, the rates offered by Dewan Housing are much higher.

AAA-rated fixed deposits from the likes of Gruh Finance, HDFC (Platinum) and LIC Housing offer 9-9.5 per cent for a similar tenure (ranging from 12 to 18 months). Mahindra & Mahindra Financial Services (18 months) and Bajaj Finance (15 months) offer 9.75 per cent.

Dewan Housing Finance was incorporated in 1984 and is one of the largest housing finance companies in India, with a total loan portfolio of close to ₹40,600 crore as of March 2014. The company registered 20 per cent loan growth during 2013-14. The company’s key focus is on lower and middle-income groups in Tier II and III cities. The average ticket size of its home loans is ₹10.7 lakh.

Dewan Housing posted a net profit of ₹529 crore for 2013-14, a 17 per cent growth over the previous year. The company’s gross non-performing assets (GNPA) stood at 0.78 per cent as of March 2014.

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