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Investors must look at credit quality while choosing corporate FDs

Stick to deposits of firms with high rating

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Avoid locking yourself in instruments of above 12-24-month tenure

Sanjay Kumar Singh
Conservative retail investors and senior citizens find themselves in a predicament in today’s low interest-rate environment. For instance, at 6.25 per cent, the interest rate on HDFC’s 66-month fixed deposit (FD) is at a 43-year low, according to media reports.
 
“The Reserve Bank of India’s (RBI) benchmark repo rate is at 4 per cent. This has pulled lending, and, hence, deposit rates down,” says Adhil Shetty, chief executive officer (CEO), BankBazaar.
 
By moving from a bank FD to an AAA-rated corporate FD, you may be able to boost returns by about 100-150 basis points (bps). But be choosy. “Stick to

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First Published: Oct 24 2020 | 6:07 AM IST

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