Summary:
NBFC fixed deposit rates have risen following the RBI’s repo rate hike, with select institutions offering up to 8.95%. Investors should compare tenure-specific returns, premature withdrawal rules, credit ratings, taxation and deposit insurance before choosing fixed deposits.
Why Are NBFC Fixed Deposit Rates Rising?
NBFCs and SFBs are changing the way of taking deposits and FD investors are getting higher rates of interest. Post the recent policy rate hike by the Reserve Bank of India (RBI), some financial institutions are providing returns of 7%-8.95%, which is significantly higher than many traditional bank deposits.
RBI Rate Hike Leads to Rise in Deposit Rates
The Reserve Bank of India (RBI) on October 7, 2026, in its first rate hike in almost four years, raised the repo rate by 25 basis points (bps) to 5.50% from 5.25%. The central bank also changed its monetary policy stance from neutral to calibrated tightening amid concerns over inflation and rising crude oil prices.
The policy change is beginning to affect deposit rates. NBFCs, which partly fund themselves through fixed deposits, have started raising interest rates to attract investors.
Bajaj Finance, Shriram Finance increase FD rates
Bajaj Finance has revised its FD interest rates, effective from October 7, 2026, by 15-40 bps on tenure of 12 to 60 months.
Now the company is paying regular depositors up to 7.75% per annum and 8.15% to senior citizens.
Later, Shriram Finance raised deposit rates by up to 40 bps w.e.f. October 11, 2026. The new rates are 7% for 12 month deposits, 7.50% for some medium term deposits and 7.85% for 36-60 month deposits.
Muthoot Capital Services is offering up to 8.95% on select fixed deposit tenures.
NBFCs vs Banks: Who Offers Higher FD Returns?
Selected annual interest rates for regular depositors, as reported in October 2026
| Institution | FD Interest Rate |
| Muthoot Capital Services | Up to 8.95% |
| Shriram Finance | Up to 7.85% |
| Bajaj Finance | Up to 7.75% |
| Suryoday Small Finance Bank | Up to 8.25% |
| Jana Small Finance Bank | Up to 8.00%* |
| SBI | Up to 6.30%* |
*Illustrative selected-tenure rates from October 9 comparison, not necessarily the institution's highest rate offered. Rates differ based on tenure, category of depositor and scheme.
The difference is huge. This is an extra 1% interest per year on a ₹5L deposit which is an extra ₹5,000 interest every year before tax (roughly, simple interest)
Importance of Deposit Tenure and Safety
For savers it might be worth spreading their money over one, two and three year maturities with rates going up rather than putting all their savings into a long term deposit.
This strategy, called FD laddering, allows the deposits to mature at different intervals providing liquidity and an opportunity to reinvest at the current rates.
But the higher the returns, the more different kinds of risks.
The DICGC insures deposits with banks including eligible small finance banks up to a maximum limit of ₹5L for each depositor for each bank for both principal and interest.
NBFC fixed deposits are not covered under this insurance cover. So credit ratings, repayment capacity, premature withdrawal conditions and taxation should be considered before comparing returns for investors.
What’s Next for Fixed Deposit Investors?
Further change in deposit rates would depend on policy decisions of the RBI, liquidity conditions and competition on deposits.
Some institutions may adjust longer tenure rates as borrowing costs adjust. However, higher deposit rates may also increase the cost of funds for NBFCs and may affect their lending margins.
For depositors, the new rate cycle offers more income opportunities, but the most attractive advertized return may not always meet their liquidity needs or risk appetite.
What Does a 1% Higher FD Rate Mean on a ₹5 Lakh Deposit?
A difference of one percentage point in the annual interest rate can make a meaningful difference to interest income. On a ₹5 lakh deposit, a 6% annual rate represents ₹30,000 in annual interest, while a 7% rate represents ₹35,000.
That is a difference of ₹5,000 over one year before tax, assuming simple interest and the same deposit amount and period. Actual interest received can differ depending on compounding, payout frequency, tenure, premature withdrawal and applicable taxes.
Do not compare rates in isolation: the issuer’s credit risk, deposit terms and the investor’s need for liquidity also matter.
Why FD Tenure and Deposit Safety Matter
FD laddering involves dividing savings among deposits with different maturity dates instead of placing the entire amount in a single long-term deposit. This can help investors access portions of their money at different intervals and reassess reinvestment options as rates change.
However, laddering does not remove the credit risk of the institution holding the deposit. Before choosing an NBFC fixed deposit, investors should review the issuer’s credit rating, financial position, repayment track record, interest payout terms and premature withdrawal rules.
Deposit insurance is another important distinction. DICGC covers eligible deposits held with insured banks, including eligible small finance banks, up to ₹5 lakh per depositor per bank in the same right and capacity, including principal and interest. NBFC deposits are not covered by DICGC insurance. Investors should not assume that a high interest rate carries the same protection as an eligible bank deposit.
Source: DICGC — A Guide to Deposit Insurance.
