Investors must look at credit quality while choosing corporate FDs

Stick to deposits of firms with high rating

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