2 Recurring Deposits For Debt Investors With Over 8% Returns

Recurring deposits (RDs) are a type of debt investment product that has a variable tenure that generally ranges from 6 months to 120 months and requires monthly fixed contributions, similar to mutual fund SIPs. It is a widely desired instrument because of its zero risk and may be used for both short and long-term purposes. Recurring deposits are ideal for investors who want to build their savings since they provide assured returns and deposit protection up to Rs 5 lakhs, which is insured by the DICGC.

The key element to remember here is that banks charge 10% TDS if interest income from RDs exceeds Rs 40,000 for non-senior citizens and Rs 50,000 for senior persons in a fiscal year. TDS of 20% is charged on individuals who do not furnish their PAN details to the bank. For risk-averse investors who want higher returns than FDs but do not want to invest in risky instruments such as debt mutual funds, here are two recurring deposits on which you can bet in 2022 to earn more than 8.00% return.

Shriram City Union Finance

Shriram City Union Finance, a renowned non-banking financial company (NBFC) in India, provides a recurring deposit scheme with variable tenure choices ranging from 12 to 60 months. Depending on your personal financial needs, you may set the term and regular monthly investment amount. Customers with recurring deposits can choose between an auto refund and a conversion to a fixed deposit, as well as flexible interest payments. Shriram City's recurring deposits have an ICRA rating of "MAA+/ with Stable Outlook," indicating strong credit quality. Shriram City provides an attractive 8.50 percent interest rate on recurring deposits, which is far higher than the rates offered by the top public sector, private sector, and even small finance banks.

Corporate RDs or recurring deposits of NBFCs are not guaranteed by DICGC, which is an important consideration here. They are, however, graded by multiple rating agencies, and higher or stable ratings can help to reduce the default risk involved, but not wholly. On the other hand, the Shriram Transport Finance Company (STFC) offers a recurring deposit scheme with similar perks. The Shriram Transport Finance Company (STFC) RD, on the other hand, has been rated "FAAA/Stable" by CRISIL, indicating the level of your deposit safety, and "MAA+/ with Stable Outlook" by ICRA, indicating credit quality. Both NBFCs provide more than 8% returns on the recurring deposits stated below.

Period (months)	Rate % (p.a. at Monthly rests)
12	7.03
24	7.12
36	8.18
48	8.34
60	8.5
Source: Official website of the NBFCs

North East Small Finance Bank

Let me begin with deposit safety and inform you that deposits in small finance banks are also covered by DICGC, which is an important consideration here. North East Small Finance Bank is now the only bank in the country giving an interest rate of 7.50 percent to the general public and an interest rate of 8% to senior citizens. The coolest part is that these rates are applicable on deposits maturing in two years. So, in terms of short-term investment, investing in North East SFB's recurring deposit is a good bet considering the deposit's safety and higher returns.

Tenure	Regular interest rates p.a.	Senior citizen
3 Months	4.25	4.75
6 Months	4.5	5
9 Months	5.5	6
1 Year	5.5	6
2 Year	7.5	8
3 Year	7	7.5
4 Year	7	7.5
5 Years	6.5	7
More than 5 years upto 10 years	6.5	7
Source: Bank Website