3 Best Government Fixed Deposits Promising Returns Up To 8.50%

Fixed deposits have lost their luster among debt investors, particularly elderly citizens, due to record low-interest rates on fixed deposits offered by prominent banks like SBI, Axis Bank, HDFC Bank, and ICICI Bank, which provide interest rates around 5.30 percent to 5.40 percent. Some small finance bank fixed deposits provide higher returns of up to 7.25 percent, which is much higher than the fixed deposit interest rates offered by leading private and public sector banks. However, making fixed deposit investments in government fixed deposit schemes can be a smart move for investors if they stay invested for the entire maturity tenure and avoid premature withdrawal. The best interest rates offered by government-owned companies are the sole basis for our selection of their fixed deposit schemes. As a consequence, we've compiled a list of three government-owned corporations that are now offering the highest interest rates on fixed deposits in the market, up to 8.50 percent.

Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC)

This is a wholly-owned company by the government of Tamil Nadu and licensed with the RBI as a Non-Banking Finance Company. Regular and elderly people can choose between a non-cumulative fixed deposit and a cumulative fixed deposit. The interest on a non-cumulative fixed deposit is paid on a monthly, quarterly, or annually basis.

These FDs have a two-year, three-year, four-year, and five-year term. Depending on the tenure chosen, current interest rates vary from 7.25 percent to 8.00 percent with an additional rate of 0.50% to senior citizens. Whereas under the cumulative fixed deposit option, the interest is compounded on a quarterly basis and paid on maturity. The cumulative fixed deposit has a tenure of one year, two-year, three-year, four-year, and five-year and based on your specified term the interest rate will range from 7.25 percent to 8.50 percent for the general public and senior folks are also entitled to an additional rate of 0.50%.

Applicable interest rate for Non-cumulative fixed deposit scheme

Period (Month)	Quarterly (%)
24	7.25
36	7.75
48	7.75
60	8
Source: tnpowerfinance.com

Applicable interest rate for a cumulative fixed deposit

Period (Month)	On Maturity (%)
12	7
24	7.25
36	7.75
48	7.75
60	8
Source: tnpowerfinance.com

Tamil Nadu Transport Development Finance Corporation Ltd (TDFC)

The reasons to invest in the fixed deposit scheme of TDFC are best interest rates up to 8.00% to the general public and 8.50% senior citizens. These rates are much higher than the rates of SBI, private sector banks and even small finance banks. TDFC offers two types of deposit schemes to the investors i.e. Money Multiplier Scheme (MMS) and Period Interest Payment Scheme (PIPS). Under the MMS scheme, the minimum deposit amount is Rs 50,000 and the applicable interest rates are compounded quarterly and paid on maturity.

Under the PIPS scheme, the minimum deposit amount is Rs 50,000 and interest is paid either monthly or quarterly or annually. TDFC is offering the following interest rates on fixed deposits to both regular and senior citizens which are in force from 18.01.2021.

Applicable interest rates under Period Interest Payment Scheme (PIPS)

Others				Senior Citizen
Period (Months)	Monthly (%)	Quarterly (%)	Annually (%)	Monthly (%)	Quarterly (%)	Annually (%)
24	-	7.25%	-	-	7.50%	-
36,48 &	7.75%	7.75%	7.98%	8.25%	8.25%	8.51%
60	8.00%	8.00%	8.24%	8.50%	8.50%	8.77%
Source: tdfc.in/pips

Applicable interest rates under Money Multiplier Scheme (MMS)

Others			Senior Citizen
Period (Months)	Basic Rate p.a (%)	Effective Yield p.a (%)	Basic Rate p.a (%)	Effective Yield p.a (%)
12	7	7.19	7.25	7.45
24	7.25	7.73	7.5	8.01
36	7.75	8.63	8.25	9.25
48	7.75	8.99	8.25	9.66
60	8	9.72	8.5	10.46
Source: tdfc.in/pips

Kerala Transport Development Finance Corporation Ltd (KTDFC)

KTDFC also offers two types of deposit schemes to debt investors. The company offers a Periodic Interest Payment Scheme (PIPS) and Money Multiplier Scheme (MMS). The applicable interest rate will be paid monthly or quarterly under the Periodic Interest Payment Scheme (PIPS). The applicable interest rate will be compounded monthly and paid at maturity under the Money Multiplier Scheme (MMS) of KTDFC. With effect from January 1, 2021, the following interest rate on KTDFC fixed deposits is applicable to both regular and senior citizens.

For regular customers

Period	Rate(p/a)	Approx.Maturity value for Rs 10,000 under MMS	Appoximate cumulative Annual Yield
1 year	6.00 %	10,617	6.17 %
2 years	6.00 %	11,272	6.36 %
3 years	6.00 %	11,967	6.56 %
4 years	5.75 %	12,579	6.45 %
5 years	5.75 %	13,322	6.64 %
Source: ktdfc.kerala.gov.in

For senior citizens

Period	Rate(p/a)	Approx.Maturity value for Rs 10,000 under MMS	Appoximate cumulative Annual Yield
1 year	6.25 %	10,643	6.43 %
2 years	6.25 %	11,328	6.64 %
3 years	6.25 %	12,056	6.85 %
4 years	6.00 %	12,705	6.76 %
5 years	6.00 %	13,489	6.98 %
Source: ktdfc.kerala.gov.in