Fixed deposits are popular mainly because of the safety and guaranteed income that they offer. However, not all fixed deposits are safe. Some issuers of FDs may not be credible and hence default on paying maturity proceeds. If this happens, the purpose of investing in an FD itself is defeated. To help investors like you to make the right investment decision, credit rating bureaus rate financial products like fixed deposits and others like bank loans, mutual funds, bonds, and hybrid capital instruments.
CRISIL is one such credit rating agency that rates FDs. The CRISIL rating scale for company FDs ranges from FAAA to FD, which indicates the safety of an FD and the credibility of the issuer. Here is the nomenclature of the CRISIL rating scale to help you understand the safety of an FD.
FAAA – highest safety
“F triple A” is the highest of CRISIL rankings. It means that your FD is extremely safe. By investing in an FD with FAAA rating, you can be sure to receive your accumulated interest on time and principal on maturity.
FAA – high safety
An “F double A” rating implies that your FD is quite safe and that your maturity proceeds will be paid on time. However, the safety is lower than FDs with ‘FAAA’ rating.
FA – adequate safety
A “FA” rating FD enjoys a lower degree of safety than the previous two. It means that your maturity proceeds may be sensitive to changes in internal and external circumstances.
FB – inadequate safety
An “FB” rating indicates that your investments are at risk and that the issuer may or may not pay your interest and principal on time.
FC – high risk
CRISIL rates FDs with an “FC” if the scheme carries a very low degree of safety. Dire circumstances in both business and economy can impact the issuer’s ability to make timely payments of the maturity amount.
FD – default
An “FD” rating warns investor of an even low degree of safety. It means that there are high chances that an issuer will default on payment upon maturity.
NM – not meaningful
NM ratings are FDs with the highest degree of risk and hence, you should steer clear of these.
What are the parameters for CRISIL ratings?
CRISIL rates an issuer’s FD based on the following parameters:
- Issuer’s track record
- Issuer’s debt repayment profile
- Issuer’s management team and
- Issuer’s liquidity
- Issuer’s financial obligations
- Issuer’s credibility
- Renewal rate of FD
With a sound knowledge of CRISIL ratings, you can make better investment decisions. Invest with leading issuers like Bajaj Finance Fixed Deposits that are rated FAAA by CRISIL and MAAA ICRA. In addition to stability and high credibility, Bajaj Finance also offers high-interest rates of up to 8.75% for regular investors and 9.10% for senior citizens when invested in a 3-year FD with earnings at maturity.
What’s more, you can also enjoy additional FD interest rate on the renewal of your deposit. Use the FD calculator to ladder your FDs and align them with your financial goals to enjoy liquidity at various points of time. This is a virtual calculator that helps you compute your maturity amount beforehand, which helps in planning your finances. So, wait no more and apply for a fixed deposit now. All you need is a minimum deposit amount of Rs.25,000 and basic KYC documents to get started.
