Fixed Deposits (FDs) are financial instruments issued by post offices, banks and Non-Banking Financial Companies (NBFCs). FDs are considered low risk financial assets allowing the holder to earn a fixed rate of interest irrespective of market fluctuations.
However, FDs are subject to interest rate risks. Interest rates are dependent on many macroeconomic factors like repo rates, Cash Reserve Ratio, inflation rate, credit demand, market liquidity etc. But, compared to other investment avenues, FDs carry minimum risks.
Bajaj Finance Limited(BFL), the Pune-based lending & investment arm of Bajaj Finserv Group, is a reputed player in the loans and deposits segment. It is indeed the right time to invest in Bajaj Finance FD due to the following reasons:-
- Attractive features
- The current rate of interest on retail FD is 6.60% – better than that offered by other NBFCs. If you invest online, your assured rate of return becomes 6.70%. The online application process is easy and hassle free.
- If you are a senior citizen, then you are offered an attractive rate of return of 6.85%.
- With multiple periodic payout options, you can finance your regular expenses too.
- The interest rates on Bajaj Finance FD remain the same even if you are stationed abroad. As a Non-Resident investor, you can choose a lock period between 12-36 months.
- Bajaj Finance FD is one of the few NBFC FDs in India with CRISIL and ICRA ratings of AAA. A high credit rating ensures safety of your deposits.
- You can align your FD investments with your financial goals or liquidity needs by opting for FDs of any tenure between 12-60 months.
- Minimum Deposit requirement is nominal (Rs 25,000).
- Obligatory lock-in period is short (3 months)
- Premature withdrawals, loan against FD, and bullet payment for multiple deposits are other value-added features.
- FD interest rates in India unlikely to fall
In the December 2020 bi-monthly meet, the apex bank clarified that repo rates will remain unchanged. With no changes in repo and reverse repo rates, banks are unlikely to slash FD interest rates. The reason for constant repo rates is rising inflation.
The Indian economy registered an inflation rate of 7.61% in October 2020. This is the highest inflation percentage registered since March 2014. Moreover, inflation in the Indian economy shows no signs of a downward trend. So the Central Bank is unlikely to bring about monetary policy changes that will put a downward pressure on FD interest rates at least till the end of 2021.
Moreover, credit demand too is steadily rising. Therefore FD interest rates are unlikely to fall now.
- SDP feature
- The most unique characteristic of Bajaj Finance FDs is Systematic Deposit Plan (SDP). If you are anxious about the turn of macro-economic conditions in the economy, then SDP is the best option for you.
- Under the SDP scheme, you have to make a small deposit every month. The deposit frequency can be in the range of 6-48 under the monthly maturity scheme. The maturity date of each deposit will vary. Interest rate will also differ because each chunk of money will be invested at the prevailing interest rate on the date of investment. Thus, interest rate volatilities are evened out in the long run.
- BFL also offers a Single Maturity Scheme wherein all your deposits will mature on the same date. However, please make note of the qualifiers and ‘No Renewal’ clause is attached to this scheme.
- Portfolio Diversification
With the Indian economy in a recessionary phase, most experts will ascertain that it is the best time to enter the stock markets. But stock market investments carry significant risks. So minimize your risk exposure by including FD investments in your portfolio.
Thus, this is a good time to invest in Bajaj Finance FD.