Bank deposit rate cut makes corporate fixed deposits attractive

MUMBAI: With banks slashing deposit rates, savers could take advantage from higher rates continued to be offered by companies such as HDFC, Shriram Transport, Mahindra Finance and Dewan Housing.

The spread between bank and corporate fixed deposits has widened to up to 100 basis points compared with 50-70 bps usually .

A depositor with slightly higher risk appetite can now earn interest rates of up to 10.50% with a three-year maturity .

A basis point is one hundredth of a percentage point.“Investors with higher risk appetite can invest in fixed deposits issued by companies,“ said Sandeep Nayak, executive director & CEO, Centrum Broking, which has a healthy profit track record, sound balance sheets, good governance practices and a track re cord of timely repayment.“

“The spread between a bank FD and a corporate fixed deposit has widened due to falling bank rates making it attractive for a discerning retail investor,“ he said.

Shriram Unnati Deposit offered by Shriram Transport Finance rated as AA+ can earn you 10.50%, 9.75% and 9.25% interest rates with maturities of one, two and three years.