New Delhi: Bank fixed deposits rates are on the rise given a successive increase in key lending rates by the Reserve Bank of India. But still, bank fixed deposits are not offering very attractive return averaging a return of 7 per cent for the period of one year. Having said that, if you do not find bank FDs attractive enough they are other options available in the market, which are offering you much higher return. Consider this: Tata Capital’s flagship lending arm, Tata Capital Financial Services, plans to raise Rs 7,500 crore in its maiden non-convertible debenture (NCD) sale through the issue of three, five and 10-year paper at a coupon rate of between 8.70 per cent and 9.10 per cent depending on the investor class and tenor.

NCDs are like company FDs and, generally, offer higher interest rates than bank fixed deposits. The one big difference is that they can be traded in the market but, as the name suggests, they cannot be converted into equity shares at the time of maturity.

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Before investing in NCDs you also need to know whether it is secured or unsecured NCD. Holders of secured NCDs have an advantage in case of a liquidation of the company, as they have a claim in company’s assets.  Unsecured NCDs, on the other hand, are not paid if the company goes into liquidation. They are riskier and offer a higher rate of interest than the secured. Shriram’s NCD falls into the secured category.

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Applications need to be in multiple of Rs 1,000 and the minimum subscription amount has been set at Rs 10,000.

The money raised through the issue, which will open on September 10, will be primarily used for on-lending to business.

Recently, Mahindra Finance, the rural finance company, also increased interest rates on its term deposits. The revision in rates became effective from August 23, 2018. The interest rate for deposits upto 12-months have been increased by 30 basis points to 8.00 percent, while those for 18-months have been increased by 35 basis points to 8.10 percent, and for deposits upto 24-months rates have been hiked by 10 basis points to 8.35 percent. Investors are eligible for 0.25 percent higher rates, if they choose the online mode of investment with a different tenure.