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According to common belief, government-owned bank deposits and fixed deposits in government debt appear to be the safest of all investment options, but they are also likely to have the lowest returns. But unlike a typical bank FD, corporate term deposits are debt securities that pay a higher yield. Sundaram Financial Ltd., a non-bank financial company, raised deposit rates.
The new rates will come into effect from November 16. Following this initiative, the rates for all durations were raised. Over the past 30 years, the Chennai-based company has earned a AAA rating and is considered one of the best in this industry.
On non-cumulative deposits maturing in 12 to 24 months, the company raised the interest rate to 7.15% per annum, 6.93% on a monthly basis and 6.97% on a quarterly basis. The legal entity raised the interest rate on non-cumulative FDs with maturities of 36 months to 7.30% per annum, 7.07% per month and 7.11% per quarter.
For the elderly, Sundaram Finance Ltd. increased the annual interest rate to 7.50% per annum, 7.25% per month and 7.30% on a quarterly basis for non-cumulative deposits maturing in 12 to 24 months. For non-cumulative FDs due in 36 months, the company raised the interest rate to 7.80% per annum, 7.53% per month and 7.58% per quarter for seniors. Non-cumulative FDs offer clients the option of monthly or quarterly (March, June, September and December) interest payments.
Interest and principal on cumulative FDs are paid at maturity. For cumulative deposits maturing in 12 to 24 months, Sundaram Finance Ltd. raised the annual interest rate to 7.15%, and for deposits maturing in 36 months, to 7.30%. The company raised the annual interest rate on aggregate deposits maturing in 12 to 24 months for seniors to 7.50%. For deposits maturing in 36 months, seniors will receive 7.80%.
Fixed income investors could do well over the next few years, economists say, as equities are not expected to rally in the near future. In order to reduce inflation, central banks around the world are raising interest rates, which can be great news for depositors. However, there is no reason for fixed income yields to rank among the lowest. By taking on more risk, investors can earn greater returns on their FD investments.