For Interest Rates Up To 9%, Open FD With Small Finance Banks, NBFCs, NCDs

When your financial goal is unlikely to be met by modest interest rates offered by fixed deposits (FD) in a large bank such as SBI (State Bank of India), you can explore other fixed income instruments that pay higher interest rates in comparison to the bank FDs. Though there are several such savings schemes, some of the more common ones include FDs by small finance banks, non-convertible debentures (NCDs) and the terms deposits offered by non-banking financial companies (NBFCs). Most of these savings schemes offer annual interest rates which are as high as 8-9 percent, nearly 200-250 basis points higher than the Fixed Deposit (FD) interest rates by large banks such as State Bank of India (SBI) which offers 6.65 percent on its one-year fixed deposits (FDs).

However, before taking a plunge, one must factor in all key parameters that are likely to affect your savings and income. These factors include risk involved, flexibility of savings instruments, and ease of withdrawal, among other factors.

Ease of investment: Unlike FDs by NBFCs and small finance banks (SFBs), non-convertible debentures (NCDs) can be listed, and are tradeable in the stock markets. These instruments, unlike other fixed income instruments, can be bought and sold in the stock markets, and hence offer liquidity to the investors.

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