Mahindra Finance FD – High returns of 12.21% p.a. – How far this is true?

Mahindra Finance FDMahindra Finance FD – High returns of 12.21% p.a. – How far this is true?

Mahindra Finance FD advertisement is appearing in almost all investment websites which shows that effective yield is 12.21% p.a. How far this is true? What are the features of Mahindra Finance FD and what are the risks?

About Mahindra Finance

Mahindra Finance i.e. Mahindra and Mahindra Financial services Ltd is part of Mahindra Group. It provides vehicle loans, personal loans, home loans and SME loans in urban and rural areas.

About Mahindra Finance FD

It is not new that Mahindra Finance is offering FD schemes. However with its current advertisement campaigns, it has catched the attention of several investors.

Also read: Best company fixed deposit schemes to invest in 2013.

Features of Mahindra Finance FD

1) Mahindra finance is offering FD in cumulative and non-cumulative options.

Cumulative option: Under this option, an investor would get interest on maturity along with principal. The interest is compounded annually and would get re-invested. The effective yield would be high and would be paid at maturity.

Non cumulative option: Under this option, investor can choose to get interest amount either by every quarter or by every half year. If an investor is choosing to get interest every quarter, the interest would get credited to their bank account by 30-Jun, 30-Sep, 31-Dec and 31-Mar. If they are opting for half year interest, the interest would be paid on 30-Sep and 31-Mar.

2) Senior citizens would get 0.25% higher interest rate p.a. comparing to others. The interest rate indicated on all advertisements saying 'high return of 12.21% p.a.' is for Senior citizens for 5 years period with cumulative option.

3) Mahindra group employees would get 0.35% p.a. additional interest comparing to others.

4) Mahindra Finance FD is rated by Crisil research as FAAA which indicates high level of safety.

You may also like : Best unique fixed deposit schemes to invest

Interest rates are enclosed below

Mahindra Finance FD-Interest rates

How about company financials?

Company fixed deposit schemes are always risky as it depends upon the company financials too.

The revenues in the last 3 years have grown at an average rate of 27%. Last financial year the revenues grown at 39% (FY 2011-12) which shows a healthy growth.

The profitability in the last 3 years is in between 22% to 23%. Last financial year profitability is around 22%. This shows the stability of the profit numbers.

The repayment is also a factor to be looked into. Since the interest is paid through ECS in bank directly for non cumulative option and have not heard about any payments defaulted, we do not see any challenges as of now.

Conclusion: In my opinion, Mahindra Finance FD is a best investment plan considering the good returns and higher Crisil research rating. Instead of investing a big amount in this, you can diversify and invest part of your investments in such fixed deposit schemes.

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Mahindra Finance FD Review

Suresh KP


  1. Hi Suresh, The informations provided by are really appreciable and worth it. I am looking for some short term investment with tax benefit and moderate profit with zero risk to very low risk. Any suggestions please.



    1. Somnath, There are no short term investment options with tax benefit. You need to invest minimum of 3 years to get tax benefit. You can invest in best tax saving ELSS mutual funds where the lock-in period is 3 years. Check this article for top funds in this category. These are low risk investment options.

  2. Suresh,

    I am really loving your website, articles and your personal suggestions. Does all company FD's are one time investments or do we need to pay regularly?

    1. Rajanandan, Good unique question. Currently there is no Recurring deposit concept in company fixed deposit. You need to deposit once and get interest either quarterly or at maturity.

  3. Hi Suresh,

    Please can you shed some light on Cumulative Schemes and non-Cumulative Schemes? I think, I know what these means but just wanted to be sure.



    1. Hi Denzil, in simple terms, Cumulative is one where your interest is cumulated and not paid, but re-invested. Means your interest also earns interest upto the maturity of the amount. Non cumulative schemes is opposite. You would get interest in your hand at frequent intervals. On maturity, your would just get your capital returned as interest is already paid at regular intervals

  4. Thanks for this wonderful article. I wanted to check are the returns from mahindra and mahindra fd tax free as per income tax rules.

  5. Really nice article .. I appriciate and second your suggestion regarding diversifying investment rather than investing in a single scheme and centralising the risk .

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