Bank FDs vs. NBFC FDs: Comparing Risks and Returns in 2024

Here is a comparison between Bank FD and NBFC FD.
Bank vs NBFC FD
4 mins
26 February 2024

One of the most stable investment options is a fixed deposit (FD), which ensures the safety of your funds while producing a steady return. This finally helps you reach all of your financial objectives. Both banks and Non-Banking Financial Companies (NBFC) offer fixed deposits with variable interest rates. You must research and contrast the market's current FD rates before investing. You may assess the returns on your FD when budgeting your expenses by doing a little market research.

Before starting your research, you must be aware of what NBFC’s and bank FDs are and what they have for you.

1. Bank or NBFC FD, which offers higher returns?

Every individual who wants to invest ideally looks for options that offer higher returns along with the security of their funds. In the case of FD, NBFCs offer 1-2% higher interest rates than banks. Several top nationalised banks provide rates in the range of 5-6% p.a.

Private banks offer rates up to 6-6.50% p.a., and NBFCs like Bajaj Finance offer interest rates of up to 8.85% p.a. on fixed deposits.

These rates also depend on how long you are holding your funds in an FD. A longer tenure results in larger returns as the tenure you select for your investments affect the FD rates. NBFC like Bajaj Finance, offers you to start a fixed deposit with just Rs. 15,000 for tenure ranging from 12 months to 60 months. You can receive a maximum return of up to  8.85% p.a.* on Bajaj Finance Fixed Deposit.

Pro tip

Enjoy higher interest rate with Bajaj Finance Digital FD. Unlock returns of up to 8.85% p.a. by investing for 42 months via our website and app.

2. Bank or NBFC, which is safe for FD?

If you are investing in a banks' or NBFC FD, you need to know how secure your funds are with them. Security is the most crucial factor for investments.

In the case of a bank FD, your investment is secured under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme by default. This means that your money will be safe even if your bank gets shut down for any reason.

The Investment Information and Credit Rating Agency (ICRA) evaluates the credit risk of all the NBFCs in India. You can confidently invest in Bajaj Finance Fixed Deposit as it has the highest credit ratings— CRISIL AAA/ STABLE and [ICRA]AAA(Stable). Your investments are safe with this level of credibility, as a high rating reduces the risk of loss.

Click here to calculate your returns on FD using FD calculator.

Frequently asked questions

What is the Digital FD offered by Bajaj Finance?

Bajaj Finance has launched a new FD variant called "Bajaj Finance Digital FD" for a period of 42 months. Bajaj Finance is providing one of the highest interest rates of up to 8.85% p.a. for senior citizens and for the customers below the age of 60 they are providing up to 8.60% p.a. The Digital FD can be opened and managed only through the Bajaj Finserv website or app.

What is the NBFC fixed deposit interest rate?

Different NBFC fixed deposit interest rates vary, you can visit official website of each NBFC to check their current FD rates.

Which NBFC offers the highest rates on FD?

NBFC offering the highest rates on FDs may change, so regularly compare rates from different NBFCs to make an informed decision.

How does a NBFC determine the rate of interest on fixed deposits?

An NBFC determines the interest rate on fixed deposits considering various factors, such as its profitability, internal policies, repo rates, and other conditions.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.