Sundaram Finance has raised the interest rates on its fixed deposits, according to reporting by Livemint. The company is offering returns of up to 8%.
If you're a saver, this could mean more income on a new deposit. Check the exact rate for your tenure, and the date it starts, before you invest.
Key takeaways
- Sundaram Finance has increased its FD rates, as reported by Livemint.
- The top return is up to 8%, which won't apply to every deposit.
- The rate you get depends on how long you lock in your money.
- Company FDs aren't covered by deposit insurance the way bank FDs are.
- Always check the effective date before you book.
How a fixed deposit rate hike works
A fixed deposit, or FD, is simple. You hand a lender a lump sum for a fixed time. In return, it pays you interest at a rate agreed on day one.
When a lender raises FD rates, the new rates usually apply to new deposits. Your older FD normally keeps the rate you signed up for. That's why the effective date matters so much.
The phrase 'up to 8%' is a ceiling. It's usually the best rate on the card. It often applies to one tenure, and sometimes only to senior citizens. The full rate card should be on the company's own official channels.
What changes for savers
Let's use a simple example. Say you put ₹1,00,000 in an FD for one year. At 7%, you'd earn about ₹7,000. At 8%, you'd earn about ₹8,000. That's ₹1,000 more, before tax.
These figures are examples to show the idea. They're not the company's actual rate card.
| Rate | Interest on ₹1,00,000 for one year | Extra vs 7% |
|---|---|---|
| 7% | ₹7,000 | None |
| 7.5% | ₹7,500 | ₹500 |
| 8% | ₹8,000 | ₹1,000 |
Remember that FD interest is taxable under your income slab. Tax may also be deducted at source once your interest crosses a yearly limit. So your take-home return is a little lower than the headline rate.
Who is affected
The biggest winners are people booking a fresh FD. That includes anyone whose old deposit is maturing and who's deciding where to put the money next.
Retirees who live off interest may also take note. A higher rate means a slightly bigger monthly or yearly payout.
If you already hold an FD, your rate usually stays the same until it matures. You can't normally switch to the new rate midway.
What to do now
Don't rush. A good FD decision takes a few minutes of checking. Here's a simple list:
- Find the rate for your tenure on the official rate card.
- Note the effective date of the new rates.
- Check the company's credit rating and its track record.
- Compare with bank FDs on our interest rates page.
- Spread your savings so one deposit isn't everything.
It also helps to read the rules on premature withdrawal. Some FDs pay a lower rate if you break them early.
For more savings and rate stories, visit our news hub.
Frequently asked questions
Will my existing Sundaram Finance FD get the new rate?
Usually not. A hike normally applies to new deposits or renewals. Your current FD keeps the rate you booked at.
Is a company FD as safe as a bank FD?
Not quite. Bank deposits are insured up to a set limit per depositor. Company FDs don't carry that cover, so check the credit rating first.
Is the 8% return guaranteed for everyone?
No. 'Up to 8%' is the highest rate on offer. Your rate depends on your tenure and, in some cases, your age.
BankCreds analysis
The headline number is 8%, but treat it as the best case. Most savers won't get the top rate. It usually needs a specific tenure or a senior citizen status.
Here's a simple view. A family with ₹5,00,000 to park earns about ₹40,000 a year at 8%. At 7%, it's about ₹35,000. The gap is ₹5,000 a year, or roughly ₹400 a month. That's useful, but it's not life-changing.
What this does not mean
A higher rate doesn't make the deposit safer. A company FD carries more risk than a bank FD, and that's partly why it pays more. Don't chase the extra return without checking the credit rating. Also, this hike doesn't help you if your FD is already running. It only matters when you book a new deposit or renew an old one.
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
- Livemint — originating report https://www.livemint.com/money/personal-finance/sundaram-finance-hikes-interest-rates-on-fixed-deposits-offers-up-to-8-returns-check-details-and-effective-date-11792079598334.html
- DICGC deposit insurance — Deposit insurance covers bank deposits up to a set limit per depositor https://www.dicgc.org.in/
- Reserve Bank of India — RBI regulates non-banking finance companies that accept deposits https://www.rbi.org.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
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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