FD Watch. An interesting offer

Interest rates seem to have begun their downward march, with banks such as State Bank of India, slightly lowering their rates across timeframes. But outside the safe shelter of bank fixed deposits, non-banking finance companies still offer higher rates.

Although NBFC deposits are riskier than banks, and because they are not covered by deposit insurance, you can look to NBFCs with the highest credit rating to park your surpluses.

Dewan Housing Finance is one such NBFC, offering among the best rates for various timeframes.

The housing finance company has the highest AAA (FD) credit rating from CARE and FAAA by Brickwork.

These ratings mean that your deposit enjoys the highest level of safety with respect to servicing of the deposit.

The Dewan Housing Finance deposits suit those with investment horizons of one to two years.

For those who want to lock-in surpluses for a period of 12 months, Dewan Housing offers a 9.5 per cent interest rate. This is higher than other NBFCs which hold AAA-credit ratings, such as HDFC, LIC Housing Finance and M&M Financial Services, which give out 8.9 to 9.4 per cent for deposits of this tenor. The highest one-year bank deposit fetches 9 per cent.

For a 14-month deposit and deposits for 24 months, the rate is 9.75 per cent. These rates are among the highest offered by similar-rated NBFCs. A two-year deposit with Gruh Housing Finance, for instance, fetches 9 per cent.

Privileged customers — shareholders, senior citizens, those who have taken the company’s home loans and so on — get an additional interest rate of 0.4 per cent.

These rates are for the cumulative option. Interest payout options of various tenors are available, but keeping your deposit locked in is far more beneficial as you will earn interest on interest.

The minimum investment for the 14-month deposit is ₹10,000, but the other deposits require a much lower minimum investment of ₹2,000. Every individual depositor also gets an accidental death insurance cover for ₹1 lakh, though there may be conditions to this.

Dewan Housing, among the largest private housing finance players, has most of its footprint in Tier II and III cities. The company’s focus is on the lower to middle income groups in these regions.

It had a loan book of around ₹44,742 crore as of September 2014, a growth of 25 per cent over the comparable year-ago period. Its loan book grew at 20 per cent in the 2013-14 fiscal.

Gross non-performing assets stood at 0.78 per cent for the six months ended September 2014, unchanged from the level in March 2014.

Net interest margin stood at 2.7 per cent. Net profits were up 20 per cent for the April-September 2014 period.