HDFC Ltd fixed deposits: Offering ‘secure’ fixed income of up to 7.61% interest per annum

Special and premium deposits offer fixed rates; regular deposits offer fixed & variable rates; do note that HDFC deposits are not insured

Kumar Shankar Roy Dec 16, 2019

Fixed depositIf you are looking to secure fixed income with a reasonable interest rate, deposits with HDFC Ltd. offer a compelling opportunity. Housing Development Finance Corporation Limited (HDFC) is India’s premier housing finance entity and has been in existence for over 40 years. HDFC deposits are one of the safest in the industry. CRISIL has reaffirmed “FAAA/Stable” rating and ICRA has reaffirmed “MAAA (stable)” rating for the 25th consecutive year. For individuals, HDFC deposits come in three forms: regular deposits, special deposits and premium deposits. RupeeIQ gives you more details. Read on.

Regular deposits

Regular HDFC deposits are available in three ticket sizes: for deposits up to Rs 2 crore, for deposits above Rs 2 crore but below Rs 5 crore, and interest rates above Rs 5 crore but below Rs 25 crore.

For all deposits, there are 5 interest generation options: monthly, quarterly, half-yearly, annual and cumulative option. Typically, the cumulative option offers the highest interest rates. In the cumulative option, the interest is compounded annually.

With effect from November 8, 2019, you can get 7.15% to 7.41% per annum in the 12-23 months tenures depending on the interest generation option chosen for regular deposits of up to Rs 2 crore. There is no annual income plan in this tenure. The rates are similar for 24-84 months tenures, and there is an annual income option available.

Monthly income options require a higher minimum investment of Rs 40,000. The rest can be started with as low as Rs 20,000 only.

If you are a senior citizen, you can get 0.25% more in additional interest rate but that is valid for deposits of up to Rs 2 crore only.

Take a detailed look at the interest rates for regular deposits of HDFC Ltd. below. This will be helpful for those who wish to keep higher amounts than Rs 2 crore in HDFC deposits. Do remember to visit HDFC website for the prevailing rates or contact its branches before placing such deposits.

HDFC regular interest rates

Special deposits and premium deposits

HDFC special deposits come in two unique tenures: 33 months and 66 months. The interest rates are valid for deposits of up to Rs 2 crore.

As you can see below, HDFC special deposits offer a higher interest rate per annum. In both 33 and 66 month tenures, the monthly option offers 7.35%, quarterly option offers 7.4%, half-yearly option offers 7.47%, annual income and cumulative options offer 7.61% each.

There are also HDFC premium deposits. These come in four unique tenures: 15 months, 22 months, 30 months and 44 months. Both in cases of HDFC special deposits and HDFC premium deposits, the minimum investment for monthly income option is Rs 40,000 — this is in-line with regular deposits.

The interest rates on HDFC premium deposits range from 7.20% to 7.56% per annum for normal citizens.

Take a detailed look at the interest rates on both special and premium deposits below.

HDFC Special and Premium FD

How to apply

HDFC deposits can be opened through an account payee cheque favouring HDFC Ltd, or remittance of funds through RTGS, NEFT or fund transfer into HDFC’s bank account on any working day (other than Saturday). The depositor must intimate HDFC latest by 12.30 pm on the day of remittance so that interest shall accrue from that date; else interest shall accrue from the next working day.

Here is a link to the application form (to go page 3):

How is interest calculated

As per HDFC Ltd, interest will be payable on the deposit from the date of realization of cheque or transfer of funds into HDFC’s bank account on any working day (other than Saturday) with prior intimation.

Interest on deposits placed under Monthly Income Plan, Non-Cumulative Option and Annual Income Plan are paid on fixed dates. Monthly Income Plan (MIP) interest is paid on the last day of each month.

In the quarterly option, interest is paid on June 30, September 30, December 31 and March 31.

In the half-yearly option, the interest is paid on September 30 and March 31. In the annual option, the interest is paid on March 31.

In the cumulative interest option, the interest is compounded annually and accrued every year after deducting tax, wherever applicable. The principal along with interest will be paid on maturity once the discharged deposit receipt is received by HDFC Ltd.

Do note that there is an option to get variable rates in case of HDFC regular deposits. In this case, the interest rate on the variable rate deposit is linked to the benchmark rate and will vary from time to time with the benchmark rate. The benchmark rate is the rate of interest applicable to the HDFC fixed-rate deposit product for the corresponding period. The rate of interest (ROI) will be reset at the beginning of each interest period. The ROI prevailing on the first day of the interest period will be applicable for the entire interest period.

Do note that a deposit placed under the variable rate deposit cannot be changed to a fixed-rate deposit before the maturity date. In case there is no specific selection made by the depositor on the application form, the fixed rate will be considered.

Quick loan facility

As per HDFC Ltd., loan against deposit is available after three months from the date of deposit up to 75% of the deposit amount, subject to the terms and conditions framed by HDFC. Interest on such loans will be 2% above the deposit rate. This facility is not available for deposits from minors and NRIs.

TDS norms

No tax deduction at source occurs on interest paid/credited up to Rs 5,000 in a financial year. Income tax will be deducted at source under Section 194A of the Income Tax Act, 1961, at the rates in force.

If the depositor is not liable to pay income tax and the interest to be paid/credited in a financial year does not exceed the maximum amount which is not chargeable to income tax, the depositor may submit a declaration in Form No. 15G so that income tax is not deducted at source.

Senior Citizens (60 years and above) may submit a declaration in Form No. 15H. In such cases, PAN (Permanent Account Number) must be quoted in the Form 15G/H, else the form is invalid.

In case PAN is not mentioned, the rate of TDS would be 20% as per section 206AA(1) of the Income-Tax Act, 1961.

Premature withdrawal costs

Premature withdrawal is not allowed for HDFC deposits before completion of three months from the date of acceptance.

In case of request for premature withdrawal after the expiry of three months but before six months, the maximum interest payable will be 4% per annum for individual depositor.

In case of a request for premature withdrawal after six months but before deposit maturity, the interest payable will be 1% lower than the interest rate applicable for the period for which the deposit has run. If no rate has been specified for that period, then 2% lower than the minimum rate at which the public deposits are accepted by HDFC. In respect of variable rate deposit, the interest rate applicable for the period for which deposit has run would be considered as applicable on the respective interest reset dates.

Also note that in case of HDFC deposits, the commission is paid upfront for the entire period of deposit to the authorised agent. In case of premature withdrawal, the commission is payable for the period completed and excess commission paid will be recovered from the deposit amount itself.

RupeeIQ take

HDFC is an important financial institution and is one of the strongest in terms of financial power. HDFC group has presence in banking, insurance and asset management as well.

However, depositors must note that HDFC deposits are not insured. That should not worry you too much because CRISIL has reaffirmed “FAAA/Stable” rating to the fixed deposits programme. This rating indicates that the degree of safety regarding timely payment of interest and principal is very strong. ICRA has also reaffirmed “MAAA (stable)” rating to the fixed deposit programme. This rating is the highest credit quality rating assigned by ICRA. The rated deposits programme carries the lowest credit risk.

In the event of the death of the first/sole depositor, repayment of deposit and payment of interest will be made to the joint depositor first in order of survivor/nominee on submission of the death certificate without reference to the heirs and/or legal representatives of the deceased.

Disclaimer: Views expressed here in this article are for general information and reading purposes only. They do not constitute any guidelines or recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial instrument including deposits of HDFC Ltd.


Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at kumarsroy@rupeeiq.com.

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