NBFC FDs Offer 8.95%: Is Your Money Safe?
Several big NBFCs like Shriram Finance and Mahindra Finance are offering fixed deposits with returns up to 8.95% per year in 2026. That beats most bank FDs by a fair margin. But higher returns come with higher risk. Before you move your savings, here's what every Indian investor needs to know about corporate FDs.
If you park ₹5 lakh in an NBFC FD at 8.95% for 3 years, you earn roughly ₹1.47 lakh in interest — enough to pay for a decent family vacation or nearly 2 years of a child's school fees.
At 8.95% annually, your ₹1 lakh NBFC FD earns ₹8,950 a year — roughly ₹2,400 more than a typical bank FD at 6.5%, but without the safety net of government deposit insurance.
Key Takeaways
Do NOT invest more than 10-15% of your total savings in any single corporate FD — unlike bank FDs, NBFC deposits are NOT covered by the ₹5 lakh DICGC insurance guarantee, so spreading risk is critical.
Check the NBFC's credit rating before investing — only consider companies rated AA or above by CRISIL, ICRA, or CARE, as lower-rated NBFCs may offer higher rates but carry a genuine risk of default.
Compare the post-tax return carefully — if you are in the 30% tax bracket, an 8.95% NBFC FD gives you an effective yield of around 6.26%, which may not be as attractive as it first appears versus tax-saving alternatives like PPF.
If you have been watching your bank FD rates hover around 6.5–7%, the 8.95% being offered by select NBFCs in May 2026 probably looks very tempting. Non-banking financial companies like Shriram Finance and Mahindra Finance have built a strong track record over decades, and their deposit products are a legitimate savings option for many Indian households. But before you transfer your hard-earned money, you need to understand exactly what you are getting into.
The single biggest difference between a bank FD and a corporate or NBFC FD is safety. Bank fixed deposits are insured up to ₹5 lakh per depositor per bank under the Deposit Insurance and Credit Guarantee Corporation (DICGC) scheme. NBFC deposits carry no such government-backed insurance. If the NBFC runs into financial trouble, your money could be at risk. This is not a reason to avoid them entirely — but it is a reason to invest carefully.
Always check the credit rating of the NBFC before investing. Ratings of AA or AAA from agencies like CRISIL or ICRA indicate a strong track record of repayment. Avoid chasing the highest rate from lesser-known companies with lower ratings. A few extra basis points are simply not worth the sleepless nights. Also remember that interest earned on NBFC FDs is fully taxable as per your income slab, so your actual take-home return will be lower than the advertised rate.
A smart approach is to use NBFC FDs as one part of a diversified savings strategy — not your only savings vehicle. Keep your emergency fund in a bank FD or liquid mutual fund. Use NBFC FDs only for money you will not need urgently, and cap your exposure at 10–15% of total savings per institution. You can also use GoCredit to compare loan and investment options suited to your financial profile.
Pro tip: Ladder your NBFC FD investments across 1-year, 2-year, and 3-year tenures. This way, you get regular liquidity, can reinvest at the best available rates, and reduce the risk of locking all your money at one point in time.
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