Monday, May 13, 2019

Fixed Deposits from KTDFC - 8.75%

KTDFC is a Kerala Government owned Non Banking Financial Company registered under the Reserve Bank of India. KTDFC accepts deposits from the public and these deposits are guaranteed by the Government of Kerala and ensure 100% security and extra earnings.

Deposits are accepted from the public under two Schemes, viz. Periodic Interest Payment Scheme and Money Multiplier Scheme.

1 Year: 8.5%
2 Years: 8.5%
3 Years: 8.5%
4 Years: 8.25%
5 Years: 8.25%

For senior citizens, there is an additional 0.25% extra.

For deposits under this Scheme, the minimum amount acceptable is Rs.10000/- and further in multiplies of Rs.1000/- and the interest is paid monthly or quarterly.

For deposits under this Scheme, deposits are accepted in multiples of Rs.1000/- with a minimum of Rs.10000/- and the deposits along with interest accruing periodically are paid at the end of the deposit period (MONTHLY COMPOUNDING).

In the case of refund of deposit to the depositor, refund will be made by crossed A/c Payee Cheque / Demand Draft at Company's cost.
In the case of renewal of deposit, the depositor shall return the deposit receipt duly discharged in favour of the Company together with application form duly filled in. In case the deposit is not renewed on maturity, but recalled on a subsequent date, the Company is not liable to pay interest on the deposit amount from the date of maturity. Similarly if the request for renewal is received after 30 days from the date of maturity, renewal will be considered only from the date of receipt of renewal request.

As per the directions of the Reserve Bank of India currently in force, the deposit shall not be repaid before the expiry of 3 months from the date of deposit. In case of premature withdrawal after 3 months, interest shall be paid at the following rates :-
After 3 months but before expiry of 6 months: No interest
After expiry of 6 months but before the date of maturity: 2% below the contracted rate

Application form along with Cash / Crossed Cheque / DD may be forwarded to the registered office of the Company. In case of payment by Cheques/DD, City Cheques/DD payable at Thiruvananthapuram alone will be accepted.

Interest earned by charitable trust is exempted under Income Tax Act vide Section II (5) (Vii).If the aggregate amount of interest payable to a resident depositor in any of the financial year under the schemes were to exceed Rs. 5000/- income tax at the appropriate rates as prescribed in the Finance Act as amended from time to time will be deducted as and when payment is made unless affidavit in the prescribed form is produced for each financial year separately by the depositor.

Loans will be permitted only to individuals on deposits up to 75% of the deposit amount under both the schemes, after the expiry of 3 months from the date of deposit Interest will be charged at 2% above the interest payable on such deposits. Interest on the loan will be adjusted out of interest payable on deposits under scheme I and compounded on loan on deposits under scheme II. The loan can be closed either by remitting the loan amount in one lumpsum before the maturity period of the deposit or it wiII be recovered out of the maturity value of such deposits at the time of maturity.

You can download the application form from here!

For more details, refer to the KTDFC website.

Considering that interest rates have gone down significantly, KTDFC still offers higher rate than most bank fixed deposits. Of course, senior citizens should first look at senior citizen saving scheme and PMVVY. Of late, there have been issues with KTDFC and the government is looking at merging KTDFC with other NBFC or infrastructure companies. The merger move was in the wake of the poor cash inflow into the KTDFC and apprehensions over honouring the maturity commitment of fixed deposit for which the government had stood guarantee and to ensure that borrowing capacity of the State was not affected.
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  1. As discussed earlier on the blog, the interest rates on a downward spiral. KTDFC was giving 11.25% interest rate. This has come down to 9.75% from 1st April, 2009. Though this is still better than bank FDs.

  2. By when do you think the interest rates would stabilize? In my view it would be stabilized by 2009 end.

  3. Never thought 10% return on fixed deposit is possible these days - and this is secured by kerala government so this is great return as well as safe!

  4. never put your hard earned investment in KTDFC because they will send you the interest by cheque in registered post as they say and if you do not recieve it they are not responsible and you may have to take an indeminity bond for Rs.200 and then get it notorised and declare that you have not recieved the registered letter and again wait endlessy for it.

  5. thambi

    10.5 for senior citizens

    ur take in it please

  6. KSFE or Kerala State Financial Enterprises Ltd offers 10% interest rate for public deposits which is slightly lower than KTDFC. However, for senior citizens it is 10.5% which is same as KTDFC.