fixed deposit

When it comes to stable instruments, fixed deposits and National Savings Certificate (NSC) are among the most preferred investment options. While NSC is a government-run scheme, fixed deposit plans are offered by banks, finance companies, and post offices in India. Though both are entirely different instruments when it comes to the investment methods and nature of returns, they are often compared by investors who attempt to find the better investment option between them. Here are some factors on which you can compare these investment avenues: 

Interest rates

The interest rate of NSC gets revised after every quarter and currently, it is 6.8%. It is slightly higher than bank FDs that are providing an FD rate ranging from 5% to 6% for longer tenors. However, Bajaj Finance which is an NBFC is offering an interest rate of up to 7.25%. 

Moreover, Bajaj Finance FD is also a stable instrument as it has received impressive credit ratings by CRISIL and ICRA, the main credit rating agencies of India. Therefore, the returns offered by its FD plans will be comparable to the returns of NSC and will certainly be much higher than the bank FDs. 


One department in which fixed deposits excel more than NSC is the tenor flexibility. This is because NSC has a fixed tenor of 5 years whereas fixed deposits give you the opportunity of choosing a tenor that is suited as per your plans. 

For instance, the available tenor range with Bajaj Finance Fixed Deposits is 12 to 60 months. As a result, you can use it for both long-term and immediate financial plans

Withdrawal policy 

NSC employs a strict withdrawal policy as you can only withdraw the accumulated funds post completion of the tenor. Premature withdrawals are possible only in rare scenarios like the death of the investor or forfeiture of the NSC scheme.

On the other hand, fixed deposits are much more flexible if we look at their premature withdrawal rules. A minimum tenor which is usually 3 months needs to be completed if you want to withdraw your deposits without paying a hefty penalty. 

Loan against investment

Some financiers like Bajaj Finance allow you to apply for a loan against FDs. Therefore, you don’t have to break your investment or search for other options whenever there is an urgent requirement of funds. You can also use your NSC as collateral while applying for bank loans. 

Though both these instruments can be used to obtain collateral-free loans, the loan amount you are applying for and the value of your NSC will play a huge role while determining whether submitting the NSC documents as collateral will be sufficient in procuring a loan. 

On the other hand, while applying for a loan against FDs, you already know the amount you will be getting as it is usually a set percentage of your FD value. Bajaj Finance, for example, allows its investors to apply for up to 75% of the FD value as a loan. 

Application process

For investing in NSC, you will have to fill the application form and submit it along with the required documents at a post office branch. This process is a bit cumbersome, especially for elderly people. The application process for opening a fixed deposit account varies from financier to financier. For example, Bajaj Finance provides a complete start-to-end online procedure to invest in a fixed deposit plan while some financiers might provide a partial online or offline investment process. 

For opening a Bajaj Finance FD you can fill an online FD form and the documents are also verified online. You also get to complete the payment via online methods like UPI or net banking. This makes the whole process convenient and hassle-free for everyone. A 0.10% higher FD interest rate is provided if you choose this investment process. 

Interest rates for Senior Citizens 

NSCs offer the same interest rate to senior citizens as they offer to the regular investor. Fixed deposits, however, might come with a slightly higher FD rate for senior citizens. Bajaj Finance FD scheme, for instance, gives a 0.25% additional interest rate to senior citizens. Moreover, the option of periodic interest payout gives them the freedom to use their deposits as an instrument that generates a regular income.

If you are thinking about how to invest money then you can invest in NSC or fixed deposits as both of them are stable investment avenues for investors. NSCs are suitable if you are looking to earn substantial returns and if the lack of withdrawal options and tenor flexibility don’t bother you. FDs, on the other hand, might prove to be better when it comes to investment methods, withdrawal options, and tenor range. However, an overall better option would be the FD schemes like the one offered by Bajaj Finance that provides convenient online investment process, stress-free withdrawal policies, a high return rate, flexible tenor, and many other impressive options.


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