Bajaj Finance raises deposit rates for 2nd time in month

Mumbai: Bajaj Finance, India’s second-largest non-banking finance company, has increased its deposit rates by as much as 10 basis points from May 10, the second such hike in the last one month. It has also reduced the minimum deposit size from ₹25,000 to ₹15,000 to attract more depositors. In late April, it had increased its deposit rates by as much as 60 basis points.

Individuals, who put money for tenures of 33, 36-40 and 44 months will now earn 6.75%, 7% and 7.20%, respectively. Senior citizens can earn 25 basis points higher than this, taking the rates to 7.45% for a 44- month period.

Investment advisors said investors would do well by spreading out their deposits over the next few months to make the best of these rate hikes.

“Rates are likely to increase further, but it is not possible to time the peak (of interest rates),” says Vidya Bala, founding partner, Prime Investor. She said investors could put money into long-tenure deposits in three tranches over the next few months.

The increase in deposit rates has come on the heels of the Reserve

‘s surprise move to increase key policy rates. As inflationary pressures accelerate, market participants are expecting more monetary tightening by the central bank, which will likely push finance companies and banks to raise money through deposits.

Finance companies’ deposits usually offer 100-150 basis points more than bank deposits. While a deposit at

pays a maximum of 5.6%, investors can earn 7.2% in a corporate fixed deposit.