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Fixed deposits (FDs) with a Non-Banking Financial Company (NBFC) offer a secure and profitable way to invest your money. Investing in FDs with an NBFC can provide higher returns than traditional banking options, as well as a range of additional benefits. It’s important to understand the features of FDs with an NBFC, such as the interest rate, tenure, liquidity, and safety, to make sure you make the right choice when investing. With the right knowledge and guidance, FDs can be a very rewarding investment option, providing great returns with minimal risk. Investing in a fixed deposit with an NBFC can be a great financial decision, so it’s important to make sure you know what you’re getting into.
What is an NBFC Fixed Deposit?
A fixed deposit is a type of savings account where the account holder deposits money for a fixed period of time, usually between 3 months and 5 years. The depositor can earn interest on this investment, while the bank or financial institution is responsible for safeguarding the money. Fixed deposits are one of the most popular investment options in India, especially among middle- and low-income individuals. Fixed deposits with an NBFC offer higher returns than traditional banking options, as well as a range of additional benefits. In general, NBFCs offer higher interest rates than bank fixed deposit interest rates. These deposits are a safe and reliable option for investors looking for a high rate of return on their money. They are also an ideal investment vehicle for people looking for a large amount of money to invest at one time.
Benefits of investing in an NBFC Fixed Deposit
As with any investment, it’s important to know what you’re getting into before making a decision to invest. Investing in an NBFC Fixed Deposit can provide you with a range of benefits that you might not get with other types of investments.
Here are a few ways that investing in an NBFC FD can benefit you:
Higher Interest Rates: NBFCs are not regulated by the RBI, so they are able to offer more competitive rates of interest on FDs than traditional banks. With increasing competition in this space, NBFCs are able to offer higher rates of interest than ever before.
Greater Liquidity: With traditional bank FDs, you need to commit to a certain tenure. This means that you cannot withdraw your investment before the specified time period ends. NBFCs allow for greater liquidity, so that investors can make early withdrawals before the end of the tenure.
Greater Safety: NBFCs, such as Kannattu FinGold Finance follows strict rules and regulations regarding FD investments. This means that FDs with an NBFC is safe as traditional FDs with a bank.
A Range of Investment Options: With traditional bank FDs, you are limited to term deposits that offer a fixed rate of interest. With an NBFC, you can invest in other types of FDs as well, such as recurring deposits (RD) and convertible FRs (CR).
Interest rates offered
Interest rates for FDs with an NBFC can vary depending on the amount you are willing to invest. Generally, the larger the amount you invest, the higher the interest rate that you will get. NBFCs offer higher interest rates than conventional banks and, therefore, are a better option for investors looking for a higher rate of return.
Tenure of an FD with an NBFC
FDs with an NBFC are available in a wide range of tenures, from as short as 3 months to as long as 5 years. The tenure is the period of time over which the investment matures. With a conventional bank, you can invest for a period of 1 year or more, but with an NBFC, you can choose a shorter tenure, if you like. This can be helpful for people who want to make a quick profit, but don’t have a lot of money to invest. Generally, the longer the tenure, the higher the interest rate. However, this may not always be the case, as there are many other factors to consider, such as the source of the loan and the credit rating of the NBFC.
Liquidity of an FD with an NBFC
One of the key advantages of investing in an FD with an NBFC is that it has better liquidity. This means that you can access your funds before the end of the tenure. While conventional banks allow for partial withdrawals before the maturity date, NBFCs allow for complete withdrawals at any time before the end of the contract. You can withdraw the full amount of your investment, or you can withdraw a partial amount. Partial withdrawals are subject to certain conditions, such as paying a fine, which is determined by the NBFC. However, you can make partial withdrawals as many times as you want.
Factors to consider when investing in an FD with an NBFC
Fixed deposits with an NBFC are generally safe, secure ways of investing your money. However, before you make a decision to invest, it’s important to consider a few things. These factors can help you to make the right decision and choose the best investment option for you.
Here are a few things to consider before investing in an FD with an NBFC:
Source of the Loan: The source of the loan is one of the most important factors to consider when investing in a fixed deposit with an NBFC. The best way to determine the source of the loan is to look at the credit rating of the NBFC. Credit ratings are assigned by credit rating agencies to indicate the financial health of an organization. The higher the credit rating, the safer the investment.
Credit Rating: The credit rating of the NBFC is an important factor to consider before investing in an FD with a financial institution. Ratings are assigned to financial institutions based on their financial strength and ability to repay their debts. A high credit rating shows that the NB-FC is financially sound and has the ability to repay its debts.
Contract Details: Before signing a contract with an NBFC, it’s important to read the fine print. You should make sure to understand all the terms and conditions of the contract. This can help to protect you from any potential risks or problems.
Funding Source: The funding source of the loan is another important factor to consider before investing in an FD with an NBFC. When a bank lends money to you, it is lending you its own money. An NBFC, on the other hand, may lend you money that it has borrowed from another source, such as a foreign lender. This can make the investment less safe, as an NBFC may be less liable to pay you back, if the lender demands its money back.