The demand for fixed deposits of top-rated finance companies like HDFC, Bajaj Finance and Mahindra Finance has increased these days amid lockdown and corona transition. Because investors are distancing themselves from debt mutual funds. All the same, even after cutting interest rates at 20-40 basis points (bps) from May, investors are turning to these deposits for better returns and security in comparison to various debt mutual fund products.
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In the midst of the virus outbreak, Mahindra Finance and Bajaj Finance are offering 7.8% and 7.6% interest on 5-year FDs. HDFC is providing this facility at a rate of 7.1%. The distributors say that these companies have reduced their rates after the government's move to cut small savings deposit rates by 100 BPS.
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Investors are turning to company deposits because they pay around 160-190 BPS compared to bank deposits. State Bank of India is offering 5.7% on deposits. HDFC Bank and ICICI Bank are offering a 6% rate. Although non-banking finance companies are seen to be more vulnerable than regular banks in the current recession, investors remain confident about firms that are owned by large and owned companies.
