This “FAAA/Stable” Rated RD Is Offering 8.50% Returns: Should You Invest?

Personal Finance

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Deposit tenure and eligibility

Both Indian resident individuals and Hindu Undivided Family (HUF) can deposit for a maturity period of 12 months, 24 months, 36 months, 48 months, 60 months. For recurring deposits maturing in 12 months, Shriram Transport Finance Company will offer you an interest rate of 7.03%, deposits maturing in 24 months will fetch an interest rate of 7.12%, for deposits maturing in 36 months will fetch an interest rate of 8.18%, for deposits maturing in 48 months will provide an interest rate of 8.34% and the company will offer you an interest rate of 8.50% for deposits maturing in 60 months. From the deposit date until March 31st, the aforementioned relevant interest rates will be calculated on each monthly payment amount. These rates are applicable for a recurring deposit of a minimum amount of Rs 500.

Shriram Transport Finance Company Recurring Deposit Interest Rates

Shriram Transport Finance Company Recurring Deposit Interest Rates

Shriram Transport Finance Company’s recurring deposit interest rates are as follows, effective August 1, 2021.

Period (months) Rate % (p.a at monthly rests) Maturity value for a monthly installment of Rs 500
12 7.03 6,230
24 7.12 12,930
36 8.18 20,460
48 8.34 28,565
60 8.50 37,500
Source: stfc.in

Premature withdrawal

Premature withdrawal

Shriram Transport Finance Company also allows premature withdrawal on recurring deposits. Premature interest payments are as follows.

Up to 3 months from the date of RD (Lock-in-period) No repayment (Not applicable in case of premature repayment in the event of death of the depositor)
After 3 months to less than 6 months No interest
After 6 months but before the date of maturity The interest payable shall be 2% lower than the interest applicable, if no rate has been specified for that period then 3% lower than the minimum rate at which RDs are accepted will be applied

Should you invest?

Should you invest?

Recurring deposits are a popular investment choice for salaried persons with a low-risk tolerance who are willing to contribute to their deposit on a regular basis in consideration for a predetermined rate of interest. While we’re on the subject of recurring deposits, they’re a good choice for both short- and long-term financial goals, and unlike debt instruments, the returns on Corporate RD aren’t affected by market fluctuations.

However, while the Shriram Transport Finance Company Recurring Deposit has a high rating, such approaches assist to mitigate risk but are not purely risk-free. If the company’s monetary health capacity declines, the RD may be subject to default risk, resulting in the loss of interest and perhaps the principal amount. As a result, investors with a high-risk appetite should look for Corporate RDs rated “AAA” or above to reduce the chance of collapse.

Those who do not want to invest in corporate recurring deposits because of the risk can invest in Post Office Recurring Deposits with an interest rate of 5.8% or recurring deposits of private sector banks or small finance banks with an interest rate of up to 8%, where their deposits and interest earned are safe because they are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakhs.



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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Analysts, BFSI News, ET BFSI

Personal Finance

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The RBI interest rate decision, macroeconomic data and global trends would dictate the equity market, which is showing some signs of correction after a stellar run, this week, analysts said. Besides, investors will also track the movement of the dollar index and US bond yields this week, they said.

“The market will have an eye on the global data to get further direction. On the domestic front, we don’t have many negative cues but it will be important to listen to the commentary of RBI governor in the upcoming policy scheduled on 8th October where what he says about inflation will be important,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

On October 8, TCS will announce its Q2 earnings, Meena said.

The movement of the dollar index, US bond yields will also play an important role in the direction of global markets while crude oil prices will have a major impact on Indian markets, he added.

“This week, the RBI is scheduled to announce its monetary policy. India’s service PMI is also due to be released this week,” Vinod Nair, Head of Research at Geojit Financial Services said.

During the last week, the 30-share BSE benchmark plunged 1,282.89 points, or 2.13 per cent. Market benchmarks faced losses for the fourth straight session on Friday.

Markets would also track movement of the rupee, Brent crude and FPI investments.

“The September correction in the US markets does highlight some developing risks – a surge in global inflation, oil and commodity prices, rising interest rates, Fed taper and the recent developments on the China front – which could create intermittent disruption in investor sentiment.

“Indian markets are currently richly valued and therefore not immune from some of these headwinds. However, given the strong earnings outlook trajectory, any meaningful correction in the equity markets can serve as an entry opportunity for long-term investors with a sufficiently long investment horizon,” said Unmesh Kulkarni – Managing Director Senior Advisor, Julius Baer India.



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Study, BFSI News, ET BFSI

Banking & Finance

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An internal study by the central bank has revealed that borrower delinquency reduced after the RBI’s February 12, 2018 circular requiring banks to initiate insolvency within six months of default but deteriorated after the circular was struck down by the Supreme Court in April 2019.

The study was highlighted in an article by RBI executive director Saurav Sinha, which is part of an e-book published by the Insolvency and Bankruptcy Board of India. The article said that insolvency should not be the last resort, comparing a stressed asset to an ice cube with any delay in resolution melting away value. The article has said that a disquieting aspect for the RBI is the time taken for commencement of resolution from the time of filing application. In the article ‘IBC — A banking regulator’s perspective’, Sinha has pointed out that the study showed that notification of IBC alone did not result in any material change in behaviour of borrowers.

The article notes that the most positive impact on the credit culture was by the erstwhile February 12 circular, which resulted in increases in curing of defaults. The upgrades in the SMA-1 (special mention accounts or loans that are in default but not yet NPAs) improved to 18.6% from 5.8% before the circular.

Interestingly, the upgrades came down significantly after the Supreme Court declared that the erstwhile February 12 circular was ultra vires to the Banking Regulation Act, 1949 even though it recovered after the RBI issued rules incentivising early initiation of IBC.

Sinha has said that for the impact of IBC to be felt, the RBI needs to leverage the bankruptcy code in its resolution framework. While some commentators see bankruptcy as an extreme step, the article has said this is not the case.

“It is a disconcerting notion that IBC is seen as a last resort of resolution by many stakeholders including various banks — something that has to be thought about only after all other avenues have been extinguished. The RBI believes in the well-used analogy of a stressed borrower being similar to an ice cube taken out of the refrigerator — the longer it remains unprotected, the more ice melts into water and is lost,” the article said.

The article concludes with the expectation that the recently-introduced pre-packaged insolvency resolution process for small business is extended to all borrowers and is used in difficult resolution involving non-cooperative lenders.



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Soma Sankara Prasad likely to be next UCO Bank MD, BFSI News, ET BFSI

Banking & Finance

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The government is considering appointing Soma Sankara Prasad, the deputy managing director of State Bank of India, as managing director of Kolkata-based UCO Bank. The Banks Board Bureau (BBB) has suggested the name of UCO Bank Managing Director Atul Kumar Goel for heading Punjab National Bank as MD. The managing director position of PNB will fall vacant after the superannuation of S S Mallikarjuna Rao in January.

According to sources, since Prasad was in the reserve list when the interview for appointment for managing director of Indian Bank took place earlier this year, he has been recommended to head UCO Bank subject to various clearances including vigilance.

The final view in this regard would be taken by the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister, sources said.

The BBB, the headhunter for state-owned banks and financial institutions, in May had conducted interviews for the position of MD of Indian Bank. Post interview, Shanti Lal Jain was recommended for the post while Prasad was the candidate on the reserve list.

Last month, the Reserve Bank removed UCO Bank from its Prompt Corrective Action (PCA) Framework following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

The lender also apprised the RBI of the structural and systemic improvements that it has put in place, which would help the bank in continuing to meet the financial commitments. The public sector bank plunged under PCA in May 2017.

PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital and quantum of the non-performing asset.

The restrictions disable banks in several ways to lend freely and force them to operate under a restrictive environment that turns out to be a hurdle to growth.

UCO Bank had posted over a four-fold jump in its net profit to Rs 101.81 crore for the first quarter of the fiscal ended June 30, as bad loans fell significantly.

The lender trimmed its gross non-performing assets (NPAs or bad loans) significantly to 9.37 per cent of the gross advances as of June 30, 2021, as against 14.38 per cent at June-end 2020.

The net NPAs were down at 3.85 per cent (Rs 4,387.25 crore) from 4.95 per cent (Rs 5,138.18 crore). PTI DP ANZ MR



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Bank of Baroda, BFSI News, ET BFSI

Banking & Finance

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Bank of Baroda has been the first of the nationalised banks to have completed the amalgamation of two smaller banks with itself. The bank’s experiences in the merger have helped other consolidating public sector banks to draw their strategy. In an interview with TOI, MD & CEO Sanjiv Chadha speaks of the road ahead…

How has the second quarter been in terms of business?

There have been challenges in credit growth — the investment cycle in particular — for the last few years. Even today capacity utilisation is about 70% and it’s only when it moves up to 80% that you get a serious round of investments. We are seeing some investment in brownfield projects in companies that have gone through an ownership change. We are seeing large capacities in areas like renewable energy. We also have a large investment in electric vehicles. We are seeing progress in going beyond green shoots. For this to gather momentum and become a full-fledged revival of the investment cycle, we might be a few months away.

On the asset quality side, do you see more clean-up happening?

There has been a broad-based improvement in the corporate credit cycle, which we have seen for the last few quarters. Corporate slippage has had come down dramatically compared to what was the case in the previous quarters. Challenges in retail and MSME have got accentuated during the pandemic. Overall, in terms of credit quality for banks, I think we should see an improvement notwithstanding the challenges that we saw with the second wave.

When do you expect RBI to start normalising its monetary policy?

I think there are two pieces to the monetary policy stimulus. One has been in terms of rates and the other has been in terms of liquidity. So, you would expect that the liquidity piece will start getting normalised first. Change in the rate cycle is a few quarters ahead. The distortions in risk pricing due to liquidity surplus should get sorted and we should start seeing credit risk that way it would be in normal times.

You have launched a new digital platform BoB world. What does this mean for customers?

Covid has brought a broad and deep transformation and nearly twice the number of customers visiting the branch, now use the app. So rather than being an adjunct to the bank, it will be the bank and the other parts of the bank will become an adjunct. The thought was to enable everything that can be done in the branch within the app. Therefore, we got down to see what should be the design, branding and positioning of the app. BoB world will be the primary interface at the centre of the bank.

What is the effort that has gone into the back-end?

The bank has been making investments and was identified as the best technology bank of 2021 by the IBA. The integration (of Dena and Vijaya Bank) on a common platform after the merger gave us a robust base to build this strategy.

How scalable is the core banking platform for digital?

Today we 13 million customers using bob World which is a very robust platform and scalable. For the future cloud computing will be a very important element as this will help scale up not only in terms of users but also multiple fintech partners on the platform.

Will bob World be a super app like SBI’s Yono and are you integrating the subsidiaries?

The way the app is being positioned that you can save, borrow, invest and pay. All four capabilities are in the app and are being scaled up every day. In addition to the regular transaction, we are having things like airline ticket booking and comparison shopping across merchants to bring the cheapest proposition to the customers. The other important thing is the benefit programme which depends on the category you choose in terms of the balance you would like to maintain.

How do you as a 100-year bank plan to attract millennials?

The marketing campaign is squarely aimed at millennials. The design is something they will find appealing. They can open the account entirely online through video KYC and the account will have benefits including Amzon Prime.

Will you be part of the account aggregator platform?

It is a conversation that we are still having. But having a platform of this sort gives you a very powerful lever to make sure you can profit from certain engagements.

Will BoB World be restricted to retail?

We’re starting off with retail with about 95% of all retail services now available on mobile. The logical next step is to fashion it for other segments.

On the corporate side are there any gaps in digital banking that you will fill?

The primary banking channel for banks is mobile. Not too far ahead the mobile phone is likely to become an important piece particularly for MSME and that is what we will target next in Bob World.

How do you plan to reach unbanked areas and push the financial inclusion agenda?

It’s a matter of great pride for us that while we have a 6-7% share in banking. Our share in Jan Dhan Yojana is 15%. So one piece of service delivery will be digital but that may not be relevant to people who are on the other side of the digital divide. We have a very aggressive programme for increasing our business correspondent and increase their number from two for every branch to five BCs for every bank branch that we have. We want to double the BC outlets to 50,000.

Would you be hiring people?

The amalgamation has brought about efficiencies, but we have not shed people. Redeployment will help in filling marketing and other vacancies. We will continue to recruit specialists. For instance, we are now recruiting wealth relationship managers. We may also recruit for specific skills like digital banking. But there may not be much of an increase in the headcount.



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Only 60% banks ready with new auto debit system, customers to face inconvenience, BFSI News, ET BFSI

Banking & Finance

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Bank customers are set to face disruptions in their auto debits after new RBI norms kicked in on Friday as only about 60% of banks are ready with the new system.

Private sector lenders, including HDFC Bank, ICICI Bank, Citibank, Axis Bank, IDFC Bank are ready with the new systems. IndusInd Bank, Bank of Baroda, RBL Bank and YES Bank are also set to meet the deadline.

However, public sector banks are still working on putting the new system in place.

Dashing messages

Banks are sending communications to customers saying that they will not process the recurring payments and customers will have to make payments directly to merchants. Below are some text messages received by customers:

> “Attention! From 1st Oct’21, as per RBI guidelines on e-Mandate on cards, we will decline Non Compliant recurring txn at Merchant Web/App on your Credit/Debit Card. Alternate Solution – Retry regular payment on Merchant Web/App authenticated via OTP or Pay via AutoPay in BillPay on our NetBanking for your Electricity /Water/Gas/ Landline/Postpaid mobile/Broadband/Insurance billers,” said a message to customers by HDFC Bank.

> “In compliance with the regulatory requirements, we are currently building a solution to seamlessly manage all your domestic standing instructions for recurring payments. This solution will be available soon for you. Starting October 1, any existing standing instruction for domestic and international recurring transactions on your card account will not be processed. We request you to make these payments directly to the service providers to avoid any interruptions,” American Express said in a recent message to customers.

How does the new system work?

Under the proposed system, as a risk mitigating and customer facilitation measure, the card-issuing bank will have to send a pre-transaction notification to the cardholder, at least 24 hours before the actual charge or debit to the card. While registering e-mandate on the card, the cardholder shall be given the facility to choose a mode among available options (SMS, email, etc.) for receiving the pre-transaction notification from the issuer. On receipt of the pre-transaction notification, the cardholder shall have the facility to opt-out of the particular transaction or the e-mandate. For transactions above Rs 5,000, banks will also be required to send one time passwords to customers.

What is a standing instruction?

A standing instruction is a service offered to customers of a bank, wherein regular transactions that the customer wants to make are processed as a matter of course instead of initiating specific transactions each time.

This service relates to transactions like renewing subscription to OTT platforms, newspapers and magazines, and utility bill payments.

The issue

Large lenders and payment entities including State Bank of India, ICICI, Citi, HDFC, Axis, HSBC, Visa and Mastercard had asked the Reserve Bank of India (RBI) to postpone the deadline for putting in place a new system to alert customers on ‘standing instruction’ transactions.

The banks were asked to set up the system by March 31, 2021.

The lenders also wanted RBI to exclude transactions against pre-existing standing instructions and those with international merchants from the new conditions for e-mandates on cards for recurring transactions.



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Banks’ credit outlook ‘stable’ for FY22, says Crisil Ratings, BFSI News, ET BFSI

Banking & Finance

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Crisil Ratings has kept a ‘stable’ credit outlook for banks for the second half of financial year 2022.

Strong capitalisation will remain a key factor for private banks to have a stable credit growth, while public sector banks benefit from government support.

However, privatisation of two public sector banks, as announced in Union Budget 2021-22, will be eyed.

Banks’ credit growth is expected to revive 9-10% in FY22, after a fall of around 5% in FY21, the agency said, adding that profitability of the banking sector is set to improve over the medium term.

Gross non-performing assets are likely to touch 10-11% by the end of this fiscal.

According to reports, the GNPA is at 8-9%, supported by government schemes and restructuring dispensation, the agency said. In FY18, the GNPA had hit a peak of 11.2%.

The NPA level improved because banks have lowered their provisioning levels from before, thereby limiting the impact of legacy NPAs on future earnings, Crisil said, in its half yearly ratings round up report.

Retail segment growth is expected to return to the mid-teens this fiscal, after a slow growth reported a year ago. Within retail, housing loans, which constitute more than half of retail advances for banks, saw slow growth last fiscal, but demand remains strong over the long term, the agency said.

With rising affordability and the recent trend of working from home, demand for own houses and larger houses are likely to rise, and banks will benefit from lower competition from non-banks as well as surplus liquidity, it added.

However, a potential third COVID-19 wave remains a key near-term risk, while deceleration in economic and demand growth, both global and domestic, due to tapering of monetary and fiscal stimuli will be key medium-term risks.

The impact of the third wave is likely to be contained due to the increase in the pace of inoculations, with nearly 70% of the adult population receiving at least one dose.

For non-banking financial companies, the agency expects better credit quality than last year, but has retained a ‘monitorable’ outlook.

The credit quality growth for NBFCs is expected to pick up to 6-8% in FY22 from 2% in FY21. However, it remains lower than the pre-pandemic level of 18%.

Crisil expects NBFCs to witness an uptick in stressed assets as MSME and unsecured loans have been hit the most. However, loans to other sectors have been relatively resilient.

Asset quality in these segments continue to be impacted the most, with delinquencies rising almost 300 basis points in June 2021 against March 2021 levels, despite higher restructuring and write-offs last fiscal compared with other asset classes. Delinquency levels for these segments will remain elevated given a likely higher recovery period for borrowers, Crisil said.

Improved capitalisation and strong parentage will be key support factors for non-bank lenders. The agency noted that many NBFCs have strengthened their provisioning buffers, factoring in the COVID-19 crisis, leading to more comfortable liquidity in the sector.

Crisil expects the sector to witness organic consolidation with stronger NBFCs, who have strong parentage, and gain market share.

Performance on asset quality and impact on earnings will remain key monitorables for NBFCs.



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Federal Bank records 10% loan growth in Q2, BFSI News, ET BFSI

Banking & Finance

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Private sector lender Federal Bank on Sunday said it has posted a 10 per cent growth in advances at Rs 1,37,309 crore for the second quarter ended September 30. Total advances stood at Rs 1,25,209 crore at the end of the second quarter of the last financial year, Federal Bank said in a regulatory filing.

The bank’s deposits also rose by 10 per cent (Y-o-Y) to Rs 1,71,995 crore in the quarter from Rs 1,56,747 crore in the same period a year ago, it said.

Federal Bank’s low-cost deposits–current account and saving deposits(CASA)-were up by 18 per cent to Rs 62,191 crore.

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Bank of Baroda bets on super app, BFSI News, ET BFSI

Banking & Finance

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Mumbai: Bank of Baroda will position its new digital platform bob World as the main bank and all banking channels will be an adjunct to the primary platform. The public sector lender is adopting a strategy similar to SBI, which is working to integrate all services on its Yono platform.

Bank of Baroda MD & CEO Sanjiv Chadha told TOI that post-pandemic, the bank has seen a surge in digital transactions and twice the number of branch visits are happening on the app. “So rather than being an adjunct to the bank, it will be the bank and the other parts of the lender will become an adjunct. The thought was to enable everything that can be done in the branch within the app,” said Chadha.

“The way the app (bob World) is positioned, you can save, borrow, invest and pay. All four capabilities are in the app and are being scaled up every day. In addition to regular transactions, we are having things like airline ticket booking and comparison shopping across merchants to bring the cheapest proposition to the customers,” said Chadha. The bank plans to extend use of the app from retail to businesses as well.

For the financial inclusion and to reach out to people who do not have digital access, the bank is also doubling the number of business correspondents to 50,000.

“It’s a matter of great pride for us that while we have a 6-7% share in banking. Our share in Jan Dhan Yojana is 15%. We have a very aggressive programme for increasing our business correspondent and increase their number from two for every branch to five BCs for every bank branch that we have,” said Chadha. The bank will however not be increasing its headcount as it has realised some efficiencies following the amalgamation of Vijaya Bank and Dena Bank, which will enable the lender to redeploy staff.



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