Inkel Fixed Deposit (FD) Scheme – Should you subscribe?
Last week, there was an advertisement in the BusinessLine about Inkel Fixed Deposit (FD) Scheme, which indicates 12.01% yield on 3 years FD Scheme. I am hearing this company FD scheme for the first time. Currently, many FD schemes are there where the yield is below 11%, hence it is catching the attention of investors. Inkel FD Scheme is offered for 1, 2 and 3 year tenure. What are the positive factors of Inkel Limited FD Scheme? What are the hidden factors of Inkel FD Scheme? Should you invest in such FD Schemes?
Also Read: Top Rated Company FD Schemes to invest in 2016
About Inkel Limited
Cochin (Kerala) based INKEL is an innovative Public Private Partnership (PPP) initiative which brings together Government Agencies and prominent Global investors and NRI industrialists/Businessmen. The functional philosophy of INKEL Ltd. is to create a vibrant environment that catalyses and promotes investment in various business/projects in Kerala. The Government of Kerala has established INKEL Ltd. with the specific objective of channelizing private capital as well as professional expertise into large scale projects viz-viz., industrial business park, roads and bridges.
It has corporate offices in Cochin and regional office in Trivandrum, Kerala.
Features of Inkel FD Scheme
- This FD Scheme is offered for 1, 2 and 3 year tenure.
- The interest of this FD scheme is 10.5%, 11% and 11.5% for 1, 2 and 3 year tenure respective.
- Effective yield would be 10.92% for 1 year, 11.46% for 2 year and 12.01% for 3 year FD scheme.
- It offers cumulative interest and non cumulative interest FD schemes.
- For non cumulative FD scheme, interest would be compounded every quarter, but would be paid either every quarter or at maturity depending on the scheme option.
- Interest would be paid every quarter on 1st Oct, 1st Jan, 1st March and 1st July.
- Non Resident Indians (NRI’s) can also apply for this FD scheme with certain conditions. However, at maturity, the principal amount would not be credited to NRE account, nor the amount can be repatriated outside India.
- Minimum deposit of Rs 25,000 and in multiples of Rs 1,000 there-off.
- Like any other FD scheme, the company would deduct TDS as per applicable rates. You can submit Form 15H/15G for banks not to deduct TDS.
- The company would like to mobilize upto Rs 40 Crores through this FD scheme now.
- CARE has rated it as BBB+ (FD) for this FD scheme.
- More details about FD scheme can be checked at this link
Interest Rates for Cumulative and Non-Cumulative FD Schemes are given below
How to apply for this FD scheme?
You can download the application form at http://share.inkel.in/application.aspx or approach Federal Bank, fill the application form and submit it at their collection center.
Why should you invest?
- High interest rates of 10.5% to 11.5% per annum for 1, 2 and 3 year tenure. Currently banks are offering lowest interest rates of less than 8%. Even Post office interest rates are low. Hence such high interest rate FD schemes would attract investors.
- The company is earning good profits. It earned profits of Rs 333 Lakhs for FY13, Rs 383 Lakhs for FY14 and Rs 1,028 Lakhs for FY15. Companies earning good profits are always good as they would not struggle for payment of interest or repayment of principal amount in future.
Why not to invest
- Company FD schemes are rated only BBB+ by CARE which indicates a moderate degree of safety regarding timely payment of servicing of financial obligation. Means, the company may default in payment of interest and repayment of principal amount.
- These are unsecured Fixed deposits. Means, in case of windup of a company, you would be given normal preference in repayment of interest or capital.
Also Read: Liquid Mutual Funds Vs Fixed Deposits – Which is better investment option?
Should you invest in Inkel FD Scheme?
Inkel FD Schemes offer the highest interest rates. It offers both cumulative and non cumulative schemes. However, these are unsecured FD schemes. The credit rating is also too low at BBB+ where a company can always default in repayment of interest or principal amount. Like I always say, invest in secured NCD’s. In case you want to invest in FD schemes, invest in high rated company FD schemes where there is less scope of default in interest payment or repayment of principal amount. Personally, I would like to stay away from such FD schemes.
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Inkel Fixed Deposit (FD) Scheme – Should you subscribe
Since when can we trust rating agencies….for high and low ratings both
Well I think, company is deserving far better rating than what it has now. When you look at the projects it has on hand and its strong Financial Backup from Kerala State Govt., you can understand that Even in the worst of the nightmares one wouldn’t imagine default of these deposits. State Ministers on Board and flourishing results in past ensures the capability of company to serve the deposit holders well.
In my opinion, one shouldn’t miss this opportunity.
Thanks for your comments.