In this rapidly changing world, securing our financial future must be our top priority.
Before mindlessly jumping into any scheme, one should gain insight into that scheme and thoroughly understand it. Here, we will be doing a comparative study of the fixed deposit (FD) schemes in both banking and non-banking sectors.
Fixed deposits are widely used savings instruments with multiple variants and features. Understanding these aspects can help investors evaluate whether an FD aligns with their financial goals.
Having clarity about financial objectives can help investors choose suitable investment options. Since interest rates and inflation levels change over time, investors often compare the fixed deposit offerings of banks and NBFCs before making an investment decision.
What Is a Fixed Deposit?
Fixed deposit is an instrument where banks and NBFCs allow customers to invest their money for a fixed amount of time and the financial institution pays interest on it. There are various types of fixed deposits: cumulative and non-cumulative fixed deposits.
Certain FDs do not allow premature withdrawal of funds in case of emergency, while some may allow it with a penalty rate. The penalty rate impacts the final return. It is always advisable to opt for an FD whose penalty rate is reasonable; the lower the penalty rate, the greater the return will be.
Bank Fixed Deposit
Bank FDs are regulated financial products offered under applicable banking regulations. In certain cases, bank deposits are covered under deposit insurance schemes up to the limit specified by regulatory authorities.
However, interest rates on bank fixed deposits may vary by institution, tenure, and prevailing market conditions. Investors often compare interest rates, product features, and withdrawal conditions before selecting a suitable option.
Premature withdrawal may be allowed by banks, subject to applicable terms and penalties, which may influence the effective return.
NBFC Fixed Deposit
- NBFC fixed deposits may offer interest rates that differ from those offered by banks, depending on the institution and tenure.
- Premature withdrawal terms and conditions are mostly flexible, with some not even charging a penalty in the initial years of the FD.
- Flexible tenure and attractive interest rates
- Both cumulative and non-cumulative deposit options are generally available.
Shriram Fixed Deposit: Benefits
Shriram Finance has a wide branch network across the country and offers financial services including fixed deposits, loans, and other financial products.
Shriram Fixed Deposit has been assigned credit ratings of "CARE AAA; Stable" by CARE Ratings; “Crisil AA+/Watch Positive” by Crisil Ratings Limited; "[ICRA]AA+ (Stable)" by ICRA and "IND AA+/Stable" by India Ratings and Research.
Investors may review product features, applicable interest rates, and deposit terms on the official website before making an investment decision.
Final Words
Choosing between a bank FD or an NBFC FD solely depends on the investor. Before investing
- Survey the market.
- Analyse the market.
- Read the terms and conditions provided by the bank or the financial institution thoroughly.
Remember that a diversified investment portfolio is the key to growing your money.