Corporates cut FD rates as credit flow looks up

A combination of declining bank rates and improving credit lines is prompting many companies to reduce interest rates on public fixed deposit (FD) schemes floated some months ago when money supply was tight.

Fixed deposit schemes launched by companies such as Mahindra & Mahindra, HDFC, ICICI, Tamil Nadu Power Finance, Sidbi and PNB Housing, amongst others, now offer interest rates between 8% and 10%, down 50-100 basis points over the rates offered six months ago.

Corporate fixed deposit schemes became popular with investors for a brief while towards the second half of 2008 and early-2009, as these schemes offered 11-13% returns. Companies found corporate fixed deposits an easy way to raise money (to meet working capital needs) when banks and other institutional lenders suddenly tightened their purse strings late last year. Around 40 companies had launched corporate fixed-deposit schemes during the second half of 2008, each competing with he other to borrow capital from retail investors.

“Those times were different. Getting credit had become very difficult and companies were left with no option but to approach small investors. Things have changed now; the liquidity situation has improved. Banks and other financial services institutions are more amenable to lend money now,” said Haribhakti Group managing CEO Shailesh Haribhakti.

Another reason for reduced pay-out is the fact that reference rates (bank rates) have come down significantly over the past six months. “Most companies link their coupon rates to the rate set by RBI. Rated issuers (companies) dictate terms now because as much as they need funds, investors too need a secure (and comparatively better yielding) asset class to park their money,” said Bajaj Capital senior vice-president Surajit Mishra.

Still, not all issuers have reduced interest rate on their public borrowings. Tata Motors FD scheme — which has collected close to Rs 1,200 crore (since December 1), according to market sources — still offers fixed deposit interest rates between 10% and 12.8% under various options. Likewise, Exim Bank has also kept its FD rates unchanged at 10%. According to experts, whenever companies want to raise bulk deposits, they tend to keep interest rates higher. Corporate FD schemes typically target conventional savers, retirees and pensioners. Upfront cash rebate is one differentiating aspect (from bank FDs) that makes company deposit schemes click among investors.

“Contrary to the trend, a few companies in manufacturing and realty sectors have raised interest rates by 25-50 bps to attract investors,” says Bonanza Portfolio distribution head Rakesh Goyal.

These companies are desperate to raise funds; being financially weak and on the verge of default, they have no other sources to raise money. Such companies approach small investors, offering higher interest rates. They are even ready to hand-out 4-5% as brokerage charges, taking the total cost of borrowing to around 16-17%. Investors should be careful about investing in such companies,” Mr Goyal added.

Source: Economictimes

Mahindra & Mahindra Financial Services invites FD from public

Mahindra & Mahindra Financial Services,a non-banking finance unit of auto major Mahindra & Mahindra, has invited fixed deposits from the public, for the first time after 3 years.

The minimum amount which an investor can invest is Rs 10,000. This is in line with a recent trend where various conglomerates, including the Tatas, have invited the public for fixed deposits, as traditional sources of funds are drying up. The fixed deposits have been rated as FAA+ by CRISIL, which indicates high safety. The yield on a 3-year fixed deposit interest rate is 13.5%. The rates are 11%, 11.5% and 12% for 12 months, 24 months and 36 months respectively.

MMFSL provides Finance for utility vehicles, tractors and cars with a focus on rural areas. It currently has a network of 442 offices and total assets under management of Rs 8,303 crores. It had a net profit of Rs 177 crore in March 2008.

Source: Economictimes

DCB revises fixed deposit rates

DCB the listed state of the art bank, has announced a change in interest rates on its fixed deposits with maturities of one year and above. Interest rates on fixed deposits for one year maturity have been fixed at 10.50%. While for One to Three years the FD rate is 10.25%.

In order to offer choice to its customers, bank has ensured very competitive Fixed Deposit rate across all tenures. In line with this strategy, the Bank has effected only a very small cut of 25 basis points for fixed deposits with a maturity of one year (365 days), which stands readjusted from the earlier 10.75% to 10.50%.

In a statement, Mr. Praveen Kutty Executive Vice President and Head Consumer Banking Group DCB, stated, “The interest rate environment has softened in recent time. DCB remains committed to offering value to its depositors and customers. We have used this opportunity to realign our fixed deposit interest rates in line with our growth strategy. We believe DCB is offering the most competitive deposit rates in the industry for deposits of One year to Three years. DCB customers will benefit from their relationship with the Bank”. The interest rate slabs are effective from February 10, 2009. DCB offers a full suite of Fixed Deposits, and value added Savings account products for the retail customer.

Source:moneycontrol.com

South Indian Bank’s new fixed deposit scheme

The South Indian Bank, will be launching a new fixed deposit scheme “SIB Eighty Plus” to commemorate its 80th year celebrations.

Addressing presspersons here on Thursday, deputy general manager and head of Bangalore region of the bank Thomas Joseph K said SIB Eighty Plus offered its customers 11 per cent fixed deposit interest rate per annum for 39 months on a minimum deposit of Rs 50,000. As an additional benefit, the depositors would be provided with a free personal accident death insurance cover up to Rs. 1 lakh.

The scheme would offer 11.25 per cent interest to senior citizens.

“The depositor on maturity of a deposit of Rs. 50,000 would get Rs 71,143, while a senior citizen will receive Rs 71,707,” he said. The deposit for domestic and non-resident ordinary accounts would be accepted till March 31, 2009, he added.

The bank will be celebrating its 80th year of existence with a function in Bangalore on January 24.

The Regional Director, Reserve Bank of India, will inaugurate the celebrations while chairman of the bank G.A. Shenoi will preside over the function. Mr. Thomas said the will complete 50 years of service to Karnataka on June 29, 2009.

The bank has got a CBS branch network of 31 branches and 11 ATM centres in Karnataka. I

n Bangalore, the bank has opened five branches during this fiscal and has plans to open another five branches, he added.

Source:thehindu.com

OBC cuts rates on NRI deposit schemes

City-based Oriental Bank of Commerce (OBC) on Wednesday said it lowered the interest rates on deposit schemes for non-residents up to 81 basis points.

Announcing the changes in its offered interest rates for FCNR (B) term deposits, the lender, in a statement, said the revised Fixed Deposit interest rates are effective from Feb 1.

"FCNR (B) deposit rates have been revised on all maturities from one to five years for US dollars, British pound, euro, Australian dollar and Canadian dollar," it said.

USD FCNR (B) deposit rate for one to two years has decreased to 2.98 from 3 per cent earlier, GBP deposit to 3.48 from 4.07 per cent, EUR deposit to 3.28 from 4.06 per cent, AUD deposit to 4.84 from 5.65 per cent and CAD deposit to 3.30 from 3.47 per cent

Source: financialexpress

NHB launches three fixed deposit schemes

Apex housing financial institution National Housing Bank (NHB) on Thursday launched three fixed-deposit schemes, including a

tax-saving scheme, which carries interest rate up to 9.25 per cent.

"The funds mobilised would be used by the NHB for its business activities," the NHB said in a release.

Under the NHB Sunidhi term-deposit scheme, the investors will get 9.25 per cent interest for 12 months and 9 per cent interest for up to five years.

NHB tax saving Suvrigdhi will pay an interest rate of 8.75 per cent. The deposit will have a lock-in period of five years.

In addition, NHB has launched Sumeru zero-coupon bonds which will be sold at a discount at Rs 4,360 with a face value of Rs 10,000 that the holder will get after a maturity period of 10 years.

For information visit to: http://www.fixeddepositindia.blogspot.com

Source: Economictimes

New fixed deposit scheme

To mark its 80th anniversary, the South Indian Bank has introduced a new fixed deposit scheme – 80 Plus - offering 11 per cent interest (11.25 per cent for senior citizens) on deposits for 39 months with a minimum investment of Rs.50,000.

Each depositor will also get a free personal accident insurance cover of Rs.1 lakh. The scheme would be launched on January 20 in Delhi, said the bank.


For more information visit to: http://www.fixeddepositindia.blogspot.com


Source:hindu.com

State Bank to hike fixed deposit rates from today

Soon after reducing deposit rates, State Bank of India (SBI), has revised upwards its rates in certain segments of its domestic term deposits. The new rates come into force from Friday. While the deposit rates have been kept unchanged for a maturity period up to 90 days, the bank has increased the rates on deposits maturing between 91 and 180 days to 7%.

The rate for 181-365 days will now be 7.50%, as against the existing rate of 6.50%. The rates for maturity periods of 1 year to less than 2 years and for the period 2 years and up to 10 years have been increased to 8.75 % and 8.50 % respectively.

Requesting anonymity, a senior bank official told FE, “We have aligned our rates to bring them in sync with other banks”. It was recently that banks like IDBI, Corporation Bank, HDFC, and Indian Overseas Bank increased their interest rates on deposits from the earlier existing 6.50% to 7.25%, on deposits with a maturity period of 91-179 days.

For senior citizens, the bank has revised the two maturity periods. The revised interest for the duration 1 year to less than 2 years is 9.25%, whereas the revised rates for period more than two years and up to 10 years is 9%. The bank has withdrawn its deposit rate offering, having a duration of 550 days.

After managing to streamline its deposit rates, the bank now faces a nationwide strike on January 25, called by various unions, to protest the impending merger of State Bank of India’s associate institutions with itself.

For more information visit to: http://www.fixeddepositindia.blogspot.com

Source : financialexpress

New fixed deposit scheme from Karnataka Bank

The Mangalore- based Karnataka Bank Ltd. has launched a new fixed deposit scheme for 365 days with effect from Friday at a simple interest of 8.25 per cent. According to a press release by the planning and development department of the bank here on Saturday, the interest is payable to the depositor on maturity date. Nomination facility is available to the depositor under the scheme. The scheme is open for a limited period only.


For more information visit to : http://www.fixeddepositindia.blogspot.com


Source: Hindu.com

Fixed deposit: The best and secured way to save money

Though the economic position of all the countries is going on up and downs all over the world, the banking system in India is so strong till now. As the encroachment of the credit crunch and raising speculation are the main reasons of the present day financial crisis, people get fear to invest their money in share market.

The businessmen in India have positive feeling regarding their financial position. As the economic position of India is mostly based on the government organizations, the speculation and financial criss have not shown much effect on Indian economy. If you study the present economic position of India, you can come to a conclusion that investing in a stock market or mutual funds will make you to face many problems. A lot of insecurity and confusions are faced by the investors, who want to invest in their money in public or private sectors. In these situations, they are searching for the best alternatives to save or invest their money.

Many of the economists in India say that going for fixed deposit is the right solution, when it compared to all the other sources where you can invest your money. This is the best source to rescue from the present liquidity crisis.

The fixed deposit is nothing but an account that allows the people to deposit their money for a period of some time. Depending on their convenience, people can choose the deposit period that say for a minimum period of 15 days to 5 years and more than that. When the deposit period comes to an end, the depositors will get high amount of interest on their deposited money. Depositing money in Indian banks is safer than other sources as the all the banks in India are under the control of Reserve Bank of India.

The main advantage of going for these deposits is that the depositors get high interest rates than the saving bank account holders. They will get lump-sum of money at a time, after the completion of maturity period of the deposit. Moreover, people do not get any insecure feeling on their deposits. The fixed deposits have been playing a prominent role, since the banking system has been introduced in the Indian economy market. They are one of the beneficial saving methods. Some years ago, people showed great interest for going long term deposits. But, now-a-days, due to the drastic changes that are occurred in the economic position of India, most of the investors want to go for short term fixed deposits.

The interest rates of the fixed deposits vary from one bank to another bank. To extend their services as well as to attract all segments of the investors, most of the banks in India offer many facilities to their customers, who want to deposit money in their banks. One of the main facilities is that the over draft facility which allows the depositors to draw money on the deposited amount, before the completion of the maturity period of deposit. On the request of depositors, some of the banks can transfer the interest amount on fixed money to the current or saving account of the depositor.

The minimum fixed amount can range from RS. 100 to an unlimited amount. If any one wants to open a fixed deposit account in a bank, he should inquire about the interest rates of all the banks. Some of the websites over the Internet help you to find the best bank that offers high amount of interest rates on depositing money.

For Any Query visit http://fixeddepositindia.blogspot.com

Source:bestsyndication