What is NBFC Fixed Deposit Rates and Best NBFC FD in 2024?

Fixed deposits are offered by several Non-Banking Financial Companies (NBFCs) with competitive interest rates, helping customers to get high returns on their money after a fixed tenure.

Let’s find out the best NBFC FD rates that are currently being offered to the depositors. It will help you to make informed financial decisions. 

What is NBFC FD?

As the name suggests, an NBFC FD product is a type of fixed deposit offered by a Non-Banking Financial Company or Institution. NBFC fixed deposit rates are generally higher than the interest rates of banks. This is mainly because of the credit risk related to NBFCs. However, a lot of customers prefer investing in FDs with NBFCs rather than banks due to high returns, especially if you have a tolerance for taking very low risk in your investment.

Features and Benefits of NBFC Fixed Deposit

Before you opt for an NBFC fixed deposit, make sure you are aligned with its features as well as benefits:

1. Guaranteed Returns

A key benefit of opening a fixed deposit account with NBFC is that you get guaranteed returns on your investment. After the maturity period, you get back your principal investment as well as the interest income. Market volatility does not hamper the repayment of your investment on maturity.

2. Loan Against FD

Several NBFCs allow you to take loans against your FD investment. During emergencies, instead of prematurely withdrawing your entire investment, opting to take a loan against it will help you not lose any interest income on the FD. Nominal interest is charged in such loans and you are eligible for up to 90% of your money as a loan.

3. Regular Option of Income

Depositing money in an NBFC fixed deposit opens a regular source of income in the form of interest for you. The financial institution allows you to select your interest payment tenure monthly, quarterly, half-yearly or annually.

4. Flexible Investment Tenures

You are eligible for flexible tenure on your FD investment with any NBFC. The deposit tenure mostly ranges from 1 year to 10 years. This flexible feature is beneficial for you to plan your investment as per your present monetary suitability and future financial requirements.

5. Better Returns Than Banks

NBFC fixed deposit rates are higher than interest rates offered by banks. Interest rates of NBFCs are attractive as well as competitive, giving you a scope to earn high returns from investments.

6. Benefits for Senior Citizens

A significant benefit that senior citizens get from investing money in NBFC fixed deposit schemes is getting additional interest rates. Most NBFCs offer an additional rate of 0.25% to 0.50% on the interest rate to senior citizens, making it a more suitable investment option for individuals.

Best NBFC Fixed Deposit Rates

If you plan to invest in FDs with NBFCs, you need to know about the interest rates offered by different financial institutions. This will help you compare and decide which NBFC FD is feasible for you presently and help you attain your monetary plans.

In this section, we will provide you with a list of NBFCs and their interest rates.

1. NBFC FD Rates for 1 Year

Check this table for the best fixed deposit rates NBFCs offer for a tenure of 1 year.

2. NBFC FD Rates for 3-Year

Here is a list of NBFC fixed deposits and their interest rate applicable for a 3-year FD.

3. NBFC FD Rates for 5-Year

Check this table below for the best NBFC fixed deposit rates if you invest your money for 5 years.

How to Open an NBFC FD?

Opening an FD account with an NBFC is a simple and quick process. Let us check the step-by-step guide below to understand the process of applying for an NBFC FD account.

• Step 1: Visit the official website of the NBFC with whom you want to book your FD account.
• Step 2: Navigate to the ‘Fixed Deposits’ section and select ‘Apply for FD’ to apply for your fixed deposit account.
• Step 3: You will get an application form for FD. fill in the form with all necessary and personal details, such as name, age, PAN card, etc.
• Step 4: Select the term of your deposit, followed by the amount you want to invest. Before entering these details, remember to check the tenure range and minimum investment value.
• Step 5: Input information about your nominee properly.
• Step 6: Put in details of your mobile and email address.
• Step 7: Lastly, transfer the deposit amount into your FD account.

After successfully verifying your details and information in the application form, you will receive a message in your registered mobile number and email address regarding confirmation of your FD account opening.

Documents Required for Opening a NBFC FD 

Before applying for an NBFC fixed deposit account, ensure you clearly understand the documents necessary to be submitted. Check the below pointers to know all about the documents required.

• Filled in FD account opening form of an NBFC.
• PAN card or Form 60/61.
• Identity proof – Aadhaar card, Voter ID, driving licence, etc.
• Address proof – Voter ID card, PAN card, Aadhaar card, passport, etc.
• Age proof – birth certificate, school passing/graduation certificate.
• Passport-size photographs.
• Bank account details – account number, IFSC code, and branch name.

Eligibility Criteria for NBFC Fixed Deposit

Different NBFCs have some minimum eligibility criteria which you must meet in order to open a term deposit. They are as follows:

• Applicant type: Individual, Non-Resident Individual (NRI), Hindu Undivided Families (HUFs), public and private companies, partnership firms, clubs, societies, etc.
• Age (in case of individual applicants): 18 and above (minors can open an FD under the supervision of their guardians).

Who Should Open an NBFC FD?

Some factors do not make NBFC FDs feasible for every type of customer. However, individuals looking for the following aspects in their investment can deposit money in an NBFC fixed deposit account. Let us check who should opt to open NBFC FDs.

• NBFC FD rates are typically higher compared to commercial banks. Nonetheless, they also come with some level of risk. Investors who are comfortable with moderate risk and seek better returns may find NBFC FDs appealing.
• Those looking to diversify their investment portfolio beyond conventional options like savings accounts and fixed deposits in banks may consider NBFC FDs to add variety to their investments.
• These often have short tenures, ranging from 1 to 5 years or a maximum of 10 years for a few. Individuals with short-term financial goals can use this investment tool to save money for a short period and get high returns after maturity.
• NBFC FDs can be aligned with specific financial goals, such as saving for a child’s education, buying a house, or retirement planning. Those with clear financial objectives may opt for these FDs to meet goals.

Things to Consider Before Opening an NBFC Fixed Deposit

Before you open a fixed deposit account with a non-banking financial company, certain considerations must be known to you for making informed financial decisions. Here is a list of things you must consider before opening an FD with NBFCs.

• Most NBFCs offer you the option to book an FD account in a cumulative or non-cumulative plan. In case you want payment of interest on a lump sum during maturity, go for a cumulative option. Otherwise, choose a non-cumulative option to get interest at your desired intervals of monthly, half-yearly, quarterly or annually.
• NBFC FD interest rate is a significant aspect to consider before booking an FD. check and compare interest rates of different NBFCs and read terms and conditions to invest money in the NBFC offering the best returns.
• Safety is a major point to look at while opening an FD with NBFCs. As we know, there are some risks involved with NBFC FD investments. Make sure you choose an NBFC that has credit ratings from reputed credit rating agencies, such as CRISIL or ICRA. This assures your repayment of FD after maturity.
• The availability of flexible tenure options is an important factor to consider when opening an FD with NBFC. Consider your financial goals to analyse the suitable tenure to avoid financial issues.

Conclusion

Overall, non-banking financial companies are a great source to open an FD account if you are ready to take some risk. NBFC FD rates are quite competitive and attractive in the market, making it suitable for individuals aiming for higher returns on their savings. You must thoroughly know the NBFC, its credit ratings and conditions applicable to FDs before booking an account to avoid financial discrepancies during maturity.

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Disclaimer

This article is solely for educational purposes. Stable Money doesn't take any responsibility for the information or claims made in the blog.