Sufficient liquidity, coupled with slowing credit growth, has seen several banks slash their fixed deposit rates by 15-75 basis points since September 2014.

Many non-banking financial companies (NBFC) have followed suit.

Nudged by the RBI, which cut the repo rate by 25 basis points last week, banks have continued to cut lending rates. Any upward revision in deposit rates, thus, appears unlikely. Banks such as Indian Bank and Axis Bank have already cut rates. Those with a surplus can therefore consider a two-three-year fixed deposit to lock into high rates.

Safe, but high returns After the recent spate of rate cuts, the best deal that you can get on a two-three-year bank fixed deposit is 8.9 per cent per annum, offered by DCB and KVB. Bank deposits offer the highest level of safety. NBFC deposits, though relatively risky, can fetch you better returns.

You can mitigate the risk factor to an extent by restricting yourself to the AAA-rated NBFC deposits. Dewan Housing Finance Corporation’s (DHFL) Aashray Deposit Plus is one such scheme. It enjoys the highest AAA rating by CARE and BWR FAA by Brickworks and offers the best rates among similarly-rated NBFC deposits.

What’s on offer You can invest in DHFL’s two- or three-year deposits (cumulative option) that offer an interest rate of 9.5 per cent per annum. Compounded half-yearly, this interest rate is offered for deposits up to ₹50 lakh.

In comparison, AAA-rated FDs from Mahindra and Mahindra Financial Services and Bajaj Finance offer only 9.25 per cent (compounded annually) for similar tenures. DHFL’s 40-month deposit offers a slightly higher 9.6 per cent.

Those who wish to receive payout of interest can go for the company’s two- or three-year non-cumulative deposits. Though these come with a monthly, quarterly, half-yearly and yearly payout options, only the yearly payout option offers the highest 9.5 per cent interest.

Privileged customers such as senior citizens are offered an additional 0.25 per cent rate on all DHFL deposits.

Also, compared to many other AAA-rated NBFC deposits where the minimum investment amount is substantial, you can put in as little as ₹2,000 in the DHFL FDs. Additional deposits can be made in multiples of ₹1,000. DHFL also offers a free accidental death insurance cover of ₹1 lakh to individual depositors and the first depositor in case of a joint account.

About the company DHFL is a housing finance company with a focus on the low and medium income group. Its net profit grew by 17.4 per cent (year-on-year) to ₹621 crore in 2014-15.

It had an outstanding loan portfolio of ₹51,040 crore as of March 2015, up 26 per cent from the year-ago period. At 0.8 per cent, its gross non-performing assets during 2014-15 were at the same level as in the year before.

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