Mumbai: Bajaj Finance has hiked interest rates on its fixed deposits by 25 basis points by introducing a 42-month deposit with an interest rate of 8.6% for the general public and 8.85% for senior citizens. The interest rate on the 42-month deposit compares favourably to the 8.35% offered on 44-month deposits.
The 42-month scheme termed a `digital fixed deposit’, can be booked from the app, online, or through the assisted digital mode at branches.
The rate increase comes in the wake of the RBI asking finance companies to diversify their funding sources. Bajaj Finance already has around 30% of its resources raised through FDs with a deposit book of Rs. 54,821 crores as of September 30, 2023, which is the largest among non-banks. Around two-thirds of the money comes from retail, and over 60% of the deposits are for around 44 months.
“We have always followed an approach of maintaining a diversified funding profile. Around 30% of our funds come from deposits, and nearly two-thirds of these deposits are retail.” Sachin Sikka is the executive vice president of Fixed Deposits, Investments & Rewards, Bajaj Finance Ltd. (BFL).
According to Sikka, the company’s deposit rates are benchmarked against large banks. “In fixed deposits, trust is more important than return on investment, and we see ourselves as one of the most trusted retail brands in India with AAA/stable for retail deposits, “said Sikka.
According to analysts, increasing the retail base will put the company in good stead should it become a bank. The move to hike returns on 42-month deposits is seen as a tactical one aimed at targeting the renewals of HDFC fixed deposits, as these depositors will be offered lower renewal rates following HDFC’s merger with the bank.
Bajaj Finance positions its fixed deposits as a safe and relatively liquid product and directs those seeking higher returns to mutual funds. “We differentiate between savers and investors. Which is why we offer customers the option to invest in direct mutual funds of their choice as well with zero per cent commission on our platform today,” said Sikka.
