Shriram Transport Finance FD Scheme

Shriram Transport Finance has come out with a fixed deposit (FD) scheme, and here are some details about their offer.

The Shriram Transport FD can be taken out for tenures of 12, 24, 36, 48 and 60 months, and investors can either opt for cumulative or non – cumulative deposits. The minimum investment is Rs.10,000 and multiples of Rs.1000 after that.

Here is the quarterly per annum interest rate for the different durations on the Shiram Transport Finance FD.

Tenure Interest Rate
12 8.00%
24 8.50%
36 9.00%
48 9.00%
60 9.00%

As I look at the bank interest rates page to check out the current interest rate given out by banks in India, I see that most banks are paying 6.25% or 6.50% for 1 year, and up to 7.50% for 5 years, so this is clearly higher than what banks pay. The reason for that is the credit of Shriram Transport Finance is not as good as the major Indian banks, that is the reason they pay extra for raising money through a FD. In fact, Business Line said that investors with a high risk appetite should consider a FD from Shriram Transport Finance. This was back in June 2009, and the interest rates offered were higher still.

For whatever it’s worth, Fitch has assigned a tAA (investment grade) rating to this offering. Here is a link to the application form, if you are interested in this FD. You can also invest through your broker like ICICI Direct.