ICICI Home Finance Company recently announced the launch of its special Fixed Deposits which offers interest @11.15% p.a. on 15, 20 and 30 months fixed deposits.
At the first sight the rate may seem pretty attractive when compared with other Fixed Deposits being offered by different banks. While many private sector banks offer up to 11% for around 1 year deposit, the 11.15% certainly seems to be on the higher side.
However, there are two things which are worth considering regarding ICICI HFC FD:
Firstly, unlike Bank FDs, these ICICI Home Finance FDs are not governed under RBI regulations and hence are more riskier. Though ICICI HFC deposits have AAA and MAAA ratings CARE & ICRA respectively denoting high credit quality ratings, but still bank would anyways make for a safer option.
Secondly, the rate of interest offered by ICICI HFC is payable annually and unlike Bank FD are not compounded quarterly which would make a lot of difference in final calculations.
When compared with ICICI Bank FDs, the highest rate offered is 10.5% on 390, 590 and 890 days. The annualised rate that works out on ICICI Bank FD is 10.97%, 11.32% and 11.8% respectively which works out more than 11.15% being offered by ICICI HFC.
Even in case of Bank FD, Singapore based DBS Bank is even offering 11.25% for a period of 1-2 years. So, take your pick.
Find this article at: http://www.labnol.org/india/knowledge/icici-home-finance-fd-1115-just-an-eyewash/5368/
Tags: fixed deposit, icici bank, investment, India, Knowledge
Reader Comments
Readers beware. This is a FRAUD run by the Bank and I got trapped with my Rs 49,000 hard earned money. The FD form does say 11.15 % for FDs upto Rs 15 lacs and 12% for FDs over 15 lacs. However after receiving the money ( on the clearing of cheque ) the Bank issued me an FD with only 10.4% as the rate of interest. On visiting the Rajouri Garden Branch of the Bank the lady Branch Manager was clearly found to be running this FRAUD and SCAM as she refused to provide any help. She refused to cancel the FD and refund the money. Looks like the Bank has found intelligent methods to cheat people of their hard earned money. Dear readers stay away from the FRAUD.
Written by T.Seth on 01.10.09
Just to clarify a few points here :
1. ICICI Home Finance is regulated by National Housing bank which is a 100% subsidiary of RBI.So your worries that ICICI Home Finance is not regulated by RBI and therefore more risky is unwarranted. Also, the AAA ratings mean maximum safety and timely repayments which very few companies get.
2. Different institutes use different methodology to display the rates. Interest rates can be compounded monthly, quarterly, half yearly or annually. It does not matter what the compounding frequency is as long as it is transparent. When I had invested in ICICI Home Finance FD, I had seen it mentioned on the form. Some institutions even display the yields. The point is that as long as it is transparent and you read the terms and conditions before investing your hard earned money, there is no problem. After all FMPs were giving indicative yields and people were still investing believing that that is the return they will get. The Terms and conditions is a single pager for ICICI Home Finance Fixed Deposit and not very difficult to read.
So rather than calling something an eyewash you need to perhaps wash your eyes and see the real picture.
Written by Puneet on 01.27.09