Fixed deposit rates have started to go up. According to reporting by The Financial Express, NBFCs look set to gain. An NBFC is a non-bank lender that also takes deposits from the public.
If you save in fixed deposits, higher rates mean more interest on new deposits. NBFC deposits often pay more than bank deposits, but they carry more risk. Check safety before you chase the rate.
Key takeaways
- Deposit rates are starting to rise, as reported by The Financial Express.
- NBFCs are seen as the lenders gaining from this shift in rates.
- A higher rate helps new deposits, not the FDs you already hold.
- NBFC deposits aren't covered by DICGC insurance, so safety matters.
- Compare the rate, the rating and the term before you lock in money.
How fixed deposit rates work
A fixed deposit, or FD, is money you lock with a lender for a set time. The lender pays you interest at a rate fixed on day one. When market rates rise, lenders raise what they pay on new deposits. Your old FD keeps its old rate until it matures.
An NBFC means a non-banking financial company. It lends money like a bank, but it isn't a bank. Many NBFCs take deposits, and they usually offer a little more interest than banks. They have fewer branches and savers to draw on, so they pay extra to attract money.
What changes for savers
Say you put ₹1,00,000 in an FD for one year. The table shows simple interest at a few rates. These rates are only examples, not offers from any lender.
| Example rate | Interest in one year | Extra compared with 6.5% |
|---|---|---|
| 6.5% | ₹6,500 | None |
| 7.0% | ₹7,000 | ₹500 |
| 7.5% | ₹7,500 | ₹1,000 |
| 8.0% | ₹8,000 | ₹1,500 |
Your real payout may differ a little. Many FDs add interest every quarter, which adds a small extra amount. You can see current rate tables on our interest rates page.
Who is affected
New rates matter most to people with fresh savings or an FD that's about to mature. Here's who feels the change.
- New depositors: You can lock in a better rate than a few months ago.
- Retirees: Many rely on FD interest, so a small rise helps monthly budgets.
- Existing FD holders: Nothing changes until your deposit matures.
- Borrowers: If lenders pay more for deposits, loan rates may stay firm. This isn't certain.
What to do now
Don't rush. A few quick checks will protect your money and still let you earn more.
- Check that the NBFC is on the RBI list of registered NBFCs.
- Look at the credit rating of the deposit. A higher rating means lower risk.
- Compare the rate with bank FDs in our rate tables.
- Spread your money across more than one lender.
- Pick a term you can really stay with, so you avoid early-exit penalties.
You can follow more savings and lending updates in our news hub.
Frequently asked questions
Are NBFC fixed deposits safe?
They carry more risk than bank FDs. DICGC insurance covers bank deposits, not NBFC deposits. Check the lender's registration and credit rating first.
Will my existing FD earn the new higher rate?
No. Your FD keeps the rate you locked in until it matures. You can only get the new rate when you renew or open a new deposit.
Should I break my old FD to get a higher rate?
Usually not. Early exit often brings a penalty that can wipe out the gain. Compare the penalty with the extra interest before you decide.
BankCreds analysis
Don't read this as a signal to rush into an NBFC deposit. A rise of 0.75 points on ₹5,00,000 adds about ₹3,750 a year. That's useful, but it's small next to the risk of a lender failing.
Who gains most
Savers whose FDs mature in the next few months gain the most. People with long FDs already locked in gain nothing right now. Rising rates also don't mean rates will keep rising.
A safer plan is a ladder. Split your money into FDs that mature at different times. Then you can renew each one at the rate of that day. The headline says NBFCs gain. It doesn't say you should take the extra risk.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- The Financial Express — originating report https://www.financialexpress.com/money/advantage-nbfcs-as-deposit-rates-start-moving-up-4358624/lite/
- DICGC deposit insurance — Deposit insurance covers bank deposits, not NBFC deposits https://www.dicgc.org.in/
- RBI list of registered NBFCs — Where to check that an NBFC is registered https://www.rbi.org.in/Scripts/BS_NBFCList.aspx
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Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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