12% Inkel Fixed Deposit (FD) Scheme – Should you subscribe?

Inkel Fixed Deposit (FD) Scheme – Should you subscribeInkel 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


Inkel FD Scheme-Interest rate for Cumulative option

Inkel FD Scheme-Interest rate for non-Cumulative option

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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Suresh
Inkel Fixed Deposit (FD) Scheme – Should you subscribe

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health insurance Plans etc.

15 Comments

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  1. Good to see your valuable advice. ..Thanks a ton

  2. I totally agree with your verdict that one should avoid such deposits. Well presented!!!

  3. Thanks for your frank advice

    Regards,

    Marie

  4. Please give your suggestions regarding this fixed deposit.

    1. Rohit, Pls read my conclusion. It is high risk and one should stay away from such FD’s

    2. Dear All,I track this company very closely.Govt of Kerala owns close to 33% in the company and the MD is also appointed by the Government.They are now undertaking core infrastructure projects like bridges and roads,awarded by the Government,many of these are in the annuity mode,where the returns are very high but the initial investment is more,hence they are raising money via FD.Besides they have a large land bank and they are developing industrial parks etc.I feel it is much safer than the BBB+ rating,

      Regards,

      R.J.SARMA,Kerala

      1. I agree with Mr. Sharma.

        I tried to gather as much as information as possible and have decided to INVEST in the company.

        The company is backed by Govt of Kerala.
        Plus the Promoters are renowned IAS officers and the chairman of the company is the current CM of Kerala.

        Wonderful growth the company has shown under the PPP model. Great orders on hand.

        Compared to other Companies bringing FD none has got Government backing and such renowned Board of directors.

        The rating is an ideal Investment grade rating and in the current case the rating doesn’t matter since the company is just 7-8 years old.

        Further, if you look at their Manager to the scheme and Registrar to the scheme, both of them have high creditability in the market.

        Can’t let go such opportunity.

        For the first time i disagree with Mr. Suresh.

        1. Hi Vatsal, I give pros and cons and finally my conclusion. Investors can always make conclusion with my analysis. These days my blog readers have become clever 🙂  No one can influence with some false statements.

  5. Good morning Suresh

    As always it’s nice to read you articles first thing Monday morning, and this says NRIs can apply I really like the sound of that, but when BBB+ rating is not so good and does not sound promising so I will give it a miss.

    Happy Ganesh Chaturthi to All

    Maven Cruz

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