DHFL-Fixed deposit scheme-15.94% yield-Can we invest?
Last week there was a request from one of reader Kishore who wanted to invest in DHFL Fixed deposit scheme, but wanted to know more about this investment product. DHFL fixed deposit schemes indicate that the annualized yield is as high as 15.94%. Should we invest in DHFL Fixed deposit scheme, what are the risks involved?
About DHFL
Dewan Housing Finance Ltd (DHFL) is a 29 year old company into housing finance business. It is the 3rd largest housing finance company in India and 2nd largest housing finance in private sector. Currently it offers a fixed deposit scheme Aashray Deposit Plus.
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Features of DHFL fixed deposit scheme-Aashray Deposit plus
- It offers good interest rates from 10% per annum to 10.5%
- It offers special interest rates for privileged customers up to 11% per annum and for deposits exceeding Rs 25 Lakhs.
- Longer returns if you invest for longer duration up to 84 months
- Pre-mature withdrawal available after 3 months from the date of FD
- Interest can be debited through ECS directly to your bank account
- Deposits available for the duration of 12 to 84 months (flexible tenure) and for special deposits of 14 months and 40 months.
- DHFL Fixed deposit scheme is available in cumulative and non-cumulative schemes.
- Minimum deposit for 12 to 84 months is Rs 2,000 and for 14 and 40 months deposits it is Rs 10,000.
- Interest is computed half-yearly for 12-84 months and yearly for 14 and 44 months deposits.
- Deposits greater than Rs 25 Lakhs and privileged customers, the annualized yield would work out to 15.94%.
Interest Rates for Cumulative and Non-Cumulative deposits are enclosed below.
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Why to invest in DHFL Fixed deposit scheme
- High interest rates
- Interest would be debited directly to bank account instead of waiting for cheques.
- DHFL is 3rd largest housing finance company in India
- CAGR is 49% which indicates high growth in the industry
- DHFL has zero percent of Net NPA (Non performing assets) for FY-2011-12.
- Revenues for the 3 financial years are FY2011-Rs 1,451 Crores; FY2012-Rs 2,469 Crores; FY2013-Rs 4,140 Crores which indicates a good growth in the revenues.
- Profits for the 3 financial years are FY2011-Rs 265.13 Crores; FY2012-Rs 306.36 Crores; FY2013-Rs 451.85 indicates good profit growth.
Why not to invest
- Company fixed deposit schemes are high risk. The past performance of the company may be only indicative and future performance of the company can always turn negative.
- Investment in real estate companies are always high risk as the margins can get eroded due to fluctuation in real estate prices.
Conclusion: DHFL Fixed deposit scheme interest rates are attractive. The financials are also show good growth. However, investment in real estate companies are little riskier. Considering this, an investor who is willing to take risk, can invest moderate investment in such fixed deposit schemes. Like I said earlier, invest part of your portfolio in such fixed deposits to diversify your risk.
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Suresh
DHFL-Fixed deposit scheme-15.94% yield
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Hi Suresh,
Thanks for the information. But I actually thought FDs are not risky?
They have mentioned in theor rate card that adter 7 years they would give returns around 39,000 if we invest 20,000.
Is there any case they would give less returns than they specified?
It depends upon how the company has performed?
Thanks,
Mahesh
Mahesh, Company FD returns are fixed. The risk is about repayment of capital and interest. Since it would depend upon the performance of the company, they are risky. e.g. Gitanjali Gems, there is some issue and share price has fallen more than 80% in last 3 months. Though they launched FD last month, many investors have taken a step-back on that.
Thanks a lot for the explanation.
Hi Suresh,
I started looking fot better investment options and came across this site. Your Docs/suggestions are really great.
I would like to invest around 15K – 20K, Can you please let me know the best investment options.
I would like split my investment into FD/Mutual Fund /SIPS/Fixed income. Can you please guide me on this.
Thanks
Praveen
Praveen, Good that you want to diversify your portfolio. My suggestion is invest Rs 15K in various top mutual funds in diversified and large cap sector. Refer my article this morning about 5 mutual funds which gave consistent and solid returns, you can choose them. Balance 5k open a RD with any of the bank where interest rates are high and keep investing.
Nice suggestions on your site.
Dear Suresh Sir,
We would like to start small business.
We are already in biometric & access control attendance device dealer but unfortunately we are not getting orders for this. So totaly less/no income for last 10 months. Please suggest how to improve the present business or change the business.
Hi Mala, Thought I would not be able to advice you on why your business is not running, I can help you by providing a couple of tips. Have you tried promoting thru Justdial.com or Facebook.com. There are several free advertising websites like olx.in or quickr.com. These are popular websites where any one can post free Ads. Try them
Hi Suresh,
First of all thank you very much for your investigation on this scheme as soon as I asked for a review. As you said above I see more pros than cons. I've deposited 50K in NHB which is very secure I believe. So I would like go with less amount in DHFL for 14 month tenure and will see the result.
Once again thank you for the review and all your hard work. 🙂
Thanks and Regards
Kishore B