Why NCDs are better than bank FDs if you're looking for higher returns

Investors looking for higher returns than those offered by bank fixed deposits may consider investing in non-convertible debentures (NCDs). Around Rs 185 billion worth of NCDs are slated to hit the markets or are currently open for subscription. These include offerings from players like Tata Capital Financial Services, Aadhar Housing Finance, and so on.

The primary advantage of investing in NCDs is that they usually offer higher rates of interest than bank fixed deposits (FDs). "They are currently offering an interest rate of around 9-9.5 per cent, while bank FDs mostly offer rates in the range of below 8 per cent," says Abhinav Angirish, founder, investonline.in.  

NCDs come with a few risks as well. "The key risk in an NCD