Many NBFCs have increased their fixed deposit interest rates in times of high inflation and rising interest rates. Currently, ascertaining the actual return on your FD against rising inflation will ultimately tell you how fruitful your investment has been. Amidst the policy repo rate hike, fixed deposits generally turn out to be attractive. And with volatile equity markets still in place, FDs have become a better investment option. Currently, Shriram Transport Finance and Shriram City Union Finance are offering inflation-beating FD rates under which senior citizens can earn up to 8.4% on their savings.
According to Shriram Transport, Fixed deposit It has emerged as a great investment instrument to beat rising inflation and volatile equities market.
NBFCs state that in order to increase the benefit of the consumers, most of the NBFCs have recently increased their FD rates. As Monetary Policy Committee hiked benchmark interest rate (repo rate) by 40 basis points in its off-cycle meeting to check rising inflation, the hike in corporate FD rates by NBFCs may prove to be some relief for debt investors as They allow monthly installments similar to SIPs and stop the lump sum amount.
Currently, India’s Consumer Price Index (CPI) inflation is at a multi-year high of 7.79% in April 2022. Inflation has remained above the RBI’s comfort zone for the fourth consecutive month and has prompted it to tighten monetary policy and raise the policy repo rate to 4.4. ,
Both Shriram Transport and Shriram City Union are offering senior citizens a maximum interest rate of 8.4% on their FDs. Both NBFCs offer similar FD benefits.
Here are the FD rates of Shriram Transport Finance and Shriram City Union Finance.
Shriram Transport said on its website, “You can earn interest rate up to 8.40%. Senior citizens can enjoy higher returns including 0.50% and above normal interest rates. You can earn maximum returns up to 9.25% effective yield. Huh.”
Whereas Shriram City Union on its website said, “Shriram City offers an attractive 8.40% rate of interest including 0.50% for senior citizens. With high interest rate and monthly accumulation of returns on deposits, it is easy for you to make your deposits It becomes easy. Save and plan for a financially secure future.”
down on FD 5 crore, Shriram Transport and Shriram City Union both offer a non-cumulative interest rate of 7.90% per annum on 60 months tenure, while the rate is 7.8% each on 45 months and 48 months tenure.
Both offer an additional interest of 0.5% to senior citizens who have completed 60 years of age.
In addition, an additional 0.25% per annum is offered on renewal where the deposit matures. Additional interest of 0.15% p.a. to employees of Shriram Group companies and their relatives.
Minimum amount of deposit is 5,000
Talking about why FDs are a great investment instrument to beat rising inflation and volatile equity market, Umesh Revankar, VC and MD, Shriram Transport Finance, said, “One of the best ways to reduce rising inflation levels With the central bank on a rate-hike mission, depositors have a lot to please. Your best bet for a safe investment is an inflation-beating fixed deposit. Consumer price inflation has hit an 8-year high of 7.79% in April-22, driven by a rise in global commodity prices.”
Revankar said, “Thus, with effect from May 20, 2022, we have increased our FD rates in Shriram Transport Finance and Shriram City Union Finance by 25bps, thereby offering customers FD rates of 8.4% p.a. , which includes 0.50% p.a. for Senior. Citizen. STFC has been rated FAAA/STABLE by CRISIL which indicates the highest level of safety and provides the best returns relative to competitors.”
“In a rising inflationary environment, customers need to check whether the actual return on your FD is negative or positive so as to beat inflation,” said Revankar.
Specifically, on Cumulative FDs below 5 crore, both NBFCs have an effective rate of 9.25% p.a. on 60 months tenure, 8.76% on 48 months tenure, 8.68% on 45 months tenure, 8.36% on 36 months tenure and 8.20% on 30 months tenure provide yield.
To find the yield on interest earned from FDs, one needs to divide the total return earned on investment by the number of years invested and then get the annual effective yield.