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What Makes the Bajaj Finance Fixed Deposit a Winner?

  • Highlights

  • Gain high safety and stability with fixed deposit

  • Bajaj Finance FD offers lucrative interest rates

  • Senior citizens can get 0.35% higher interest rate

  • Choose FD issuers with high safety ratings

Fixed deposits in India: An overview

One of the oldest forms of saving and growing wealth, FDs and their history is tied to the creation of the banking system in India. Banking established its foothold in the country sometime between 1906 and 1911, during the Swadeshi movement. This was the time when prominent businessmen and political leaders founded banks to preserve the public’s money. Many banks that were established then, still exist to this date. These include India Bank and Bank of Baroda, amongst others. Post-freedom, India experienced a phenomenal growth in the banking sector. The Reserve Bank of India (RBI) and Imperial Bank of India offered extensive banking services. Apart from lending financial support to businesses, their primary motive was to preserve and secure the deposits of money made by the people. This gave birth to term deposits, popularly known as fixed deposits to preserve, protect and enhance the value of a depositor’s savings.

Today, FDs are one of the most widely used investment options in the country.They hold a prominent position in the mind of an Indian investor, primarily because they offer assured gains and aren’t linked to the market.According to SEBI Investors Survey 2015, more than 95% of the Indian population prefers FDs when they think of making an investment.In terms of preferred instruments, fixed deposits trump life insurance, mutual funds or stocks.

The highest FD interest rates in India

During 1995 to 1997, investors enjoyed the highest interest rates on their fixed deposit, which was a hefty 12.3% to 13%. Today, a rate over attractive interest rate is considered good.

Types of FDs

Fixed deposits are offered by banks and by companies. While bank deposits offer safety, in that a depositor gets a deposit insurance up to Rs.1,00,000, they do not offer high interest earnings.Company FDs are offered by financial institutions and non-banking financial companies and usually come with a higher interest payout. To keep your interest safe, you can choose company FDs with a high safety rating.

Safety Ratings on FD: A Snapshot

1. Bank FDs:

a. Central Bank:
• Safety rating: CRISIL, FA
• Safety rating: CRISIL FAAA ICRA MAAA
c. ICICI Bank:
• Safety rating: CARE AAA FD, ICRA MAAA

How to Start investing in Company FD

2. Company FDs:

a. Bajaj Finance:
• Safety rating: CRISIL FAAA, ICRA MAAA
b. Dewan Housing Finance:
• Safety rating: CARE AAA FD, BWR FAAA
c. PNB Housing Finance:
• Safety rating: CRISIL FAAA/ STABLE

What is the Bajaj Finance Fixed Deposit?

The Bajaj Finance Fixed Deposit is a company FD. This means that an investor can deposit a sum of money with Bajaj Finance, an NBFC, for a fixed term. Over this period, the corpus that is invested earns interest. Unlike bank FDs, company FDs are unsecured. This means that they carry some element of risk. But, company fixed deposits are governed by the Companies Act, Section 58A and have stability ratings to help you choose a credible one.

Benefits of Bajaj Finance Fixed Deposits

• Get guaranteed returns and reap the benefit of one of the highest interest rates on your investment.
• You can choose your tenor, and select the option to gain periodic interest payouts
• In case you choose periodic payouts, you can also select the frequency of your periodic payouts.
• With a rating of FAAA by CRISIL and MAAA by ICRA, Bajaj Finance FD has the highest safety ratings, which ensure that your investment is safeguarded.
• Bajaj Finance FD also offers higher interest rates for senior citizens, which can enable them to preserve their savings in a safe and stable investment option
• Investing in Bajaj Finance FD is very easy, and you can start investing with an amount of just Rs. 25,000.

How does the Bajaj Finance FD safeguard your interest?

When you invest in an FD, you deposit an amount for a specified tenor, during which interest gets accrued to the principal and compounds over time. While several FD issuers offer lucrative interest rates, which compel investors to invest, it is always important to check the safety ratings before investing. In case you ignore FD ratings, there’s a greater likelihood of incurring losses or encountering delays.

To avoid such issues, you must pick an FD with a high safety rating. The higher the ratings, the more credible the FD provider is. Broadly speaking, credit rating agencies such as CRISIL and ICRA provide safety ratings on your investment, which can help investors take an unbiased decision regarding which fixed deposit to invest in.

Bajaj Finance has been awarded with the highest safety ratings on their investment – FAAA by CRISIL and MAAA by ICRA. By investing in Bajaj Finance FD, you can ensure that your investment amount is never at risk.

What are your options?

When investing in fixed deposits, you can either get your returns at maturity, or you can opt for periodic payouts. When you invest in FDs and opt for the option to gain interest at maturity, your interest is accumulated over the tenor and you receive the amount only at maturity.

On the other hand, periodic payouts enable you to choose your returns on a periodic basis – with the option to choose between monthly, quarterly, half-yearly or annually. Each of these types have their own benefits. You can pick an option depending on your investment goals and your cash flow needs. Getting returns at maturity suit the purpose of individuals who are not looking to fund immediate cash requirements or periodic payouts. Similarly periodic payouts could come handy for other purposes like for senior citizens who seek periodic income to fund their regular expenses.

How to choose the right FD

You can choose the most convenient FD based on various factors; for example, by considering attractive interest rates, examining your needs, the payout convenience, liquidity and so on.

Additional Read: A simple guide to using a Fixed Deposit Calculator

Factors for Selecting a FD

Are you looking to choose the right FD type for maximising your returns? If yes, here are some factors that can help you take the right decision:
• Interest rate: The interest rates for FD will vary from one financial institution to another. But, before you decide on one, make it a point to scan the market thoroughly. This will introduce you to various attractive interest rates, which you can then compare. Accordingly, select a lender that offers you the best rate. Even a minor difference in interest rates will impact your fund’s growth.
• Payout convenience: There could be various formalities to perform when you are getting the interest payment. This could include paperwork, or payment of certain charges. You should select a lender that offers the quickest and fastest payout.
• Liquidity: Not all fixed deposits are liquid. Some lenders have strict policies that levy fines or penalties for withdrawing an FD before its maturity date. If liquidity is a priority for you, refrain from investing with a lender that has your money locked down for the duration of the tenor.
• Investment goals: Ask yourself why you are investing in an FD. Is it to purchase a vehicle? Is it for retirement? You can then select an FD that matches these requirements.

How to determine your returns before investing?

The key to understanding which fixed deposit is best for you is to have all the facts and figures accessible at a glance. A smart way of doing this is to use a fixed deposit calculator. You have to enter the investment amount, interest rate, and tenor, and choose between cumulative and non-cumulative payouts. Then, the calculator will tell you how much you will have at the end of the investment period in a matter of seconds.

Here’s a look at the different benefits of an FD Calculator:
• View your returns: Since the calculator has fields or sliders to adjust the tenor, principal and interest rate, it shows you how your investment’s gains will vary when the variables change.
• Choose the right tenor: Since it shows you the returns at various tenors, it enables you to select one that matches your expectations with regards to returns.
• Easy comparison: An FD calculator gives you results in mere seconds, and so, it makes light work of comparing various fixed deposits. With its results, you’ll be able to pick the best fixed deposit easily.
• Easy to use: These calculators have user-friendly interfaces that make them easy to use. You have to just fill in a few details to get an overview of the prospective investment.
• Accuracy: Unlike doing the calculation manually—which is a long and complicated process—using a fixed deposit calculator is much simpler. You can get accurate results, which are guaranteed. This will help you make a smart decision about where to invest, and also decide the investment amount, tenor and frequency of your interest payouts.

Benefits of using an FD Calculator

Is your Fixed Deposit interest taxable in India?

The returns you earn from a fixed deposit are taxable. However, several investors are unaware of the tax rules that govern this investment. It is important to declare your FD under ‘Income from other sources’, which depends on the taxable amount limit, as per your financier.

When you invest a large sum in your FD, your tax is deducted at source (also known as TDS). The interest is taxed at the same rate as your gross income, and could vary between 0% and 30%. In case you do not fall under the tax slab, and are below 60 years of age, you can submit Form 15H, whereas senior citizens who do not fall under the tax slab, can submit Form 15G to avoid paying TDS on income earned from Fixed Deposits.
Opening Bajaj Finance FD Accounts

Why should senior citizens choose the Bajaj Finance FD?

For senior citizens looking for an investment that offers stability, along with the option to gain periodic income post-retirement, Fixed Deposit is a preferred investment option. You can easily invest your EPF savings and other lump sum amount in Bajaj Finance Fixed Deposit, where they can look for 0.35% higher interest rate, along with the flexibility to choose the tenor and the option to choose periodic payouts. You can choose the frequency of your payouts, which are monthly, quarterly, half-yearly and annual. The best part about investing in Bajaj Finance FD is that you can also determine your returns beforehand, and you don’t need to monitor your investments constantly.

The returns on your Bajaj Finance FD are also not linked to market forces, so the risk is considerably lower, and you can look for several benefits for senior citizens.

Here’s a look at some more benefits offered by Bajaj Finance FDs for senior citizens:
• High stability and credibility: Stability and safety of income is most important for senior citizens. Bajaj Finance’s FDs feature an MAAA rating by ICRA and an FAAA stable rating by CRISIL. This ensures that your investment is in safe hands.
• Online account management: The online account management service offered by Bajaj Finance lets you manage your fixed deposit easily, from the convenience of your home.
• Doorstep service: It is tiresome for senior citizens to wait in long queues and complete formalities. But, this shouldn’t deter you from investing in FDs. So, when you opt for Bajaj Finance’s FDs, you have the option to call a representative home and complete the application procedure.
• Minimal deposit amount:You only need a minimum of Rs.25,000 to start this fixed deposit. How does your FD become a tool for financing?

How does your FD become a tool for financing?

In case of emergencies, you can also take a loan against your FD, at a lower interest rate. This enables you to cater to cash flow emergencies, while also ensuring the stability of your investment. You can easily fund your personal expenses with an easy loan against FD, which offers many different benefits, some of which are listed below:

• It averts the risk of submitting valuable assets as collateral. Hence, you can keep assets like property protected.
• Loans against FD usually come with easier application formalities since you are submitting your FD as collateral. This means that your loan will be approved faster.
• If you have opted for periodic returns, the monthly returns can be used to pay a small portion of your loan’s EMI, thus lowering the repayment burden.
• These loans have lower interest rates since you are submitting some form of collateral.

How does an FD provide liquidity?

Liquidity is an important aspect of any investment option. Liquid FDs enable you to raise money instantly in cases of emergencies. The Bajaj Finance FD features flexible premature withdrawals. This means that no matter what your emergency, you can use the money from your FD. But, some FDs require you to pay hefty charges when you want to exit your deposit prematurely.
Difference between Fixed Deposits and Mutual Funds

How much income should you park in your FD, based on your risk capacity?

How much you should invest in fixed deposits will vary from investor to investor as it depends on your risk appetite. While investors with a good risk appetite might consider investing less money in FDs and more in market securities, investors with a low risk appetite will do just the opposite. Here’s a quick run-through.

• If you are a conservative investor: If you like to play it safe and invest heavily in low-risk options, invest less in market related securities like mutual funds or equity and more in an FD.

Difference Between Fixed Deposits and Stocks
• If you are a moderate risk investor: If you are a moderate risk investor, you usually like to gain from having a diverse investment portfolio. You try to maintain a 50:50 mix by investing equally in both high-risk and low-risk investments. So, you should consider investing equally in fixed deposits and other instruments.
• If you are an aggressive investor: If you seek large capital gains in a short or medium term and have a big risk appetite, you are an aggressive investor. So, you must focus more on investment options like equity and mutual funds, and add fixed deposits to your portfolio as a secondary option or safety net.

DISCLAIMER: The mentioned fixed deposit interest rates are indicative only, and may be subject to change periodically. Please check the interest rates on our website.

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