Fixed deposits continue to remain one of the most preferred investment options for individuals seeking stable and predictable returns. However, while comparing investment options, many investors often notice that certain Non-Banking Financial Companies (NBFCs) offer higher interest rates than traditional banks.
This raises an important question for investors: Why do NBFC fixed deposits often offer higher returns than banks, and how can investors benefit from these opportunities while choosing an FD plan?
Recent interest rate revisions across the industry have once again brought NBFC fixed deposits into focus, with several institutions offering competitive returns to investors seeking stability and predictable income.
Understanding how banks and NBFCs operate can help investors make more informed decisions and select investment options aligned with their financial goals.
Why investors compare bank and NBFC fixed deposits
Fixed deposits are widely used for:
Wealth preservation
Short-term savings goals
Retirement planning
Generating regular income
Diversifying investment portfolios
While safety remains a key consideration, investors also look for competitive returns. Even a small difference in interest rates can significantly affect maturity values over longer periods.
This is where many NBFC fixed deposits attract attention.
Why do NBFC fixed deposits generally offer higher interest rates?
Unlike banks, NBFCs do not operate savings or current accounts that provide access to low-cost deposits. As a result, they rely more heavily on market borrowings and fixed deposit mobilisation to raise funds.
Offering relatively higher returns helps NBFCs attract investors.
Different funding structures
Parameter
Banks
NBFCs
Access to savings accounts
Yes
Yes
Low-cost deposits
Available
Limited
Dependence on market borrowing
Moderate
Higher
Fixed deposit rates
Relatively lower
Often higher
Because of this difference, NBFCs may provide more competitive returns to depositors.
Specialised business models
NBFCs often focus on specific lending segments and optimise their capital structure accordingly. Attractive deposit rates help support these funding requirements.
Greater flexibility
Many NBFC fixed deposits offer:
Multiple tenure options
Monthly, quarterly, annual, or maturity payouts
Additional benefits for senior citizens
Fully digital investment processes
Why many investors are considering Bajaj Finance Fixed Deposits
Following its recent interest rate revision effective May 2026, Bajaj Finance now offers returns of up to 7.40% p.a. for customers below 60 years and up to 7.75% p.a. for senior citizens on select tenures.
Some of the features that investors may find attractive include:
Assured returns unaffected by market fluctuations.
Flexible tenures ranging from 12 to 60 months.
Multiple payout options—monthly, quarterly, half-yearly, annually, or at maturity.
Additional interest benefits for senior citizens.
Investments starting from ₹15,000.
Online investment and account management facilities.
Loan against fixed deposit facility for liquidity requirements.
Why interest rates matter
Even a small difference in returns can significantly affect maturity values over time.
Consider two fixed deposits with an investment amount of ₹10 lakh for five years, where interest is compounded annually.
Investment Amount
Interest Rate
Tenure
Approximate Maturity Value
₹10 lakh
7.00% p.a.
5 years
₹14.03 lakh
₹10 lakh
8.00% p.a.
5 years
₹14.69 lakh
In this example, a difference of just 1 percentage point results in an additional maturity amount of approximately ₹66,000 over five years.
This is why comparing available options before selecting an FD plan can help investors maximise returns.
How can a fixed deposit calculator help?
A fixed deposit calculator enables investors to:
Estimate maturity values
Compare multiple tenures
Understand compounding benefits
Evaluate regular income options
Plan financial goals more effectively
Instead of relying on manual calculations, investors can assess different scenarios instantly and make informed decisions.
Should investors focus only on interest rates?
No.
While returns are important, investors should also evaluate:
Credit quality
Highly rated institutions generally indicate stronger repayment capability.
Liquidity requirements
Premature withdrawal conditions should be understood before investing.
Payout preferences
Some investors may require monthly income, while others may prefer cumulative growth.
Reputation and service quality
Digital convenience and customer experience can influence the overall investment journey.
Evaluate the institution carefully
Higher returns should always be balanced with safety.
Investors should review:
Credit ratings
Financial performance
Customer service standards
Regulatory compliance
For instance, Bajaj Finance Fixed Deposits carry CRISIL AAA/STABLE and [ICRA]AAA(Stable) ratings, which reflect strong credit quality and repayment capability. The company is also trusted by more than 5 lakh customers and offers multiple payout frequencies to suit varying income requirements.
Are fixed deposits still relevant in 2026?
Despite growing interest in market-linked investments, fixed deposits continue to remain an important component of diversified portfolios.
Investors continue to prefer them because they offer:
Predictable returns
Capital stability
Low complexity
Flexible investment options
Support for long-term financial planning
Risks investors should consider
Although fixed deposits are generally considered low-risk investments, investors should be aware of certain factors:
Inflation may affect real returns.
Premature withdrawals may attract penalties.
Reinvestment risk may arise when interest rates change.
Taxation can impact post-tax earnings.
Understanding these considerations can help investors make better long-term financial decisions.
Conclusion
While attractive interest rates are one reason why NBFC fixed deposits have gained popularity, investors should evaluate returns alongside factors such as safety, liquidity, and flexibility.
Among the available options, Bajaj Finance Fixed Deposits combine competitive returns, flexible tenures, multiple payout choices, and highest credit ratings. For investors looking to build a stable fixed-income portfolio, using a fixed deposit calculator and comparing available options can help maximise long-term returns.
