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.