Fixed Deposits (FDs) remain one of the most popular investment choices for risk-averse investors in India. Many prefer them over equities or mutual funds because of their stability. Among NBFCs (Non-Banking Financial Companies) offering high interest rates, Shriram Finance often comes up — but a common question is: Is a Shriram Finance FD actually safe?
- What is Shriram Finance & How Does It Offer FDs
- What Makes Shriram Finance FDs Relatively Safe
- What Are the Risks / What to Be Careful About
- Comparison: Shriram FD vs Bank FDs
- What Credit Rating “AA+ (Stable)” Means
- Practical Tips If You Plan to Invest in Shriram Finance FD
- Recent Data & Shriram Finance’s FD Performance
- When Might Shriram Finance FD Not Be Safe / Less Suitable
- Conclusion: Balanced View
In this post, we’ll analyse what makes them relatively safe, what risks exist, what to watch for, and how they compare with bank FDs.
What is Shriram Finance & How Does It Offer FDs
Shriram Finance Ltd (part of the Shriram Group) is a well-known NBFC in India. It raises funds via various means including Fixed Deposit Schemes, and lends money (for example vehicle finance, MSME loans, etc.). The fixed deposit schemes of Shriram allow investors to deposit money for a fixed period, earning a predetermined interest.
Because NBFCs do not have exactly the same regulatory and insurance frameworks as banks, many investors wonder about the safety of putting their money with them.
What Makes Shriram Finance FDs Relatively Safe
Here are the key factors that suggest Shriram Finance FDs have a good safety profile:
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Credit Ratings
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Shriram Finance’s FDs have strong credit ratings. They are rated “[ICRA] AA+ (Stable)” by ICRA, and “IND AA+/Stable” by India Ratings & Research. Aspero+3Shriram Finance+3The Economic Times+3
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These ratings are in the “high safety / low credit risk” category among corporate / NBFC fixed deposits. While “AA+” is not AAA, it is still a very good rating. Aspero+3INDmoney+3Shriram Finance+3
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Regulation
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Shriram Finance is a regulated NBFC under the Reserve Bank of India (RBI). That means certain supervisory rules apply. INDmoney+2Shriram Finance+2
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They regularly publish FD schemes details (tenures, rates, terms) in a transparent manner. Shriram Finance+1
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Track Record & Reputed Name
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Shriram is an established name in vehicle finance and other lending businesses, with a large customer base. Though no past guarantee of future performance, a long history often helps in assessing trust. INDmoney+1
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They have not had widespread defaults on FD interest payments that are known in public domain. (Though absence of evidence is not always evidence of absence.) INDmoney+1
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Interest Rates Reflect Risk-Reward
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Because NBFCs like Shriram take somewhat more risk than banks (in terms of asset types, funding sources etc.), their FDs often offer higher interest rates. That difference partly compensates for incremental risk. Example: as of early May 2025, some rates are up to ~ 8.40% p.a. for certain tenures. The Economic Times+2INDmoney+2
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Senior citizens, women depositors, renewals often get extra bonus interest. The Economic Times
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What Are the Risks / What to Be Careful About
Even though many signs are positive, there are several risks and caveats you must consider:
| Risk | What It Means / How It Could Impact |
|---|---|
| No Deposit Insurance (DICGC) Coverage | Unlike bank FDs, most NBFC FDs are not covered under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This means that in case of NBFC insolvency or failure, there is no government-insurance protection for your principal or interest (or only contractual claim). Shriram Finance+3Finance Forum+3INDmoney+3 |
| Interest Rate Volatility | NBFCs are more affected by changes in funding cost, RBI policy, liquidity crunches etc. If their cost of funds increases (e.g., borrowing becomes expensive), they may find it harder to maintain margins. That could affect their ability to pay or rollover liabilities in stress. |
| Credit Risk / Asset Quality Risk | NBFCs often lend in areas or segments that have higher default risk (vehicle finance, small business loans etc.). If many borrowers default, the NBFC’s asset quality worsens, which could threaten its ability to honour obligations. |
| Liquidity Risk | In times of financial stress (say credit markets tight, or funding dries up), NBFCs might struggle to obtain liquidity. This can impact operations, including repayments or interest. |
| Premature Withdrawal Penalties or Loss of Interest | If you withdraw before maturity, interest may be reduced or subject to lower rate/penalty. Sometimes zero interest for early withdrawal within certain periods. Always check the terms. Groww+2INDmoney+2 |
| Regulatory / Macro Risk | Changes in regulation (NBFC regulation, borrowing norms, RBI guidelines), macroeconomic conditions (inflation, interest rates, economic downturn) may adversely affect NBFCs more than banks. |
Comparison: Shriram FD vs Bank FDs
To understand the safety trade-offs, here are how Shriram’s FDs compare with standard bank FDs:
| Feature | Bank FDs | Shriram Finance FDs |
|---|---|---|
| Regulation & Supervision | Banks have stricter regulatory oversight, more conservative asset-liability management, deposit insurance (up to a limit). | NBFC regulation is robust but less strict in some aspects; no deposit insurance for FDs. |
| Deposit Insurance | Typically insured up to ₹5 lakh (for bank FDs) via DICGC. | Not covered by DICGC (for NBFCs), so more exposure to insolvency risk. |
| Interest Rates | Generally lower, especially for shorter tenures, due to lower risk. | Higher rates to compensate risk, especially for longer tenures. |
| Risk Exposure | Banks have diversified portfolios, often less risky loan books. | NBFCs like Shriram often have more exposure to riskier segments or smaller customers, more vulnerable to economic shocks. |
| Stability | Banks tend to be more stable in crisis (better access to central bank / liquidity). | NBFCs can be more sensitive to liquidity crunches. |
What Credit Rating “AA+ (Stable)” Means
Since the credit rating is central to assessing safety, here’s what “AA+ (Stable)” implies:
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It suggests very good credit quality, low risk of default, but not the absolute top (which is often “AAA”).
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The “Stable” outlook means that rating agencies believe the company’s financial health and operating environment are unlikely to deteriorate significantly in the near term.
So, while “AA+ (Stable)” doesn’t give zero risk, it is among the safer ratings for NBFC FDs.
read more :Shriram Transport Finance Fixed Deposits
Practical Tips If You Plan to Invest in Shriram Finance FD
Here are practical things you should do / check before investing to minimise risk:
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Check the Latest Credit Rating and Reports
Always verify that the rating is current. Sometimes ratings are reviewed annually or when financials change. If you find a downgrade, re-assess accordingly. -
Read Terms & Conditions Very Carefully
Especially about premature withdrawal penalties, interest computation, compounding frequency, renewal terms. -
Choose the Tenure Wisely
Longer tenures often give higher interest, but they also expose you to longer risk. If interest rates drop or NBFC faces stress, you are locked in. So, splitting the investment (“laddering”) across different durations helps. -
Diversify
Don’t put all your FD money in one NBFC or one instrument. Mix with bank FDs, government securities etc. That spreads risk. -
Consider Senior Citizen / Women Benefits if Eligible
If you are eligible for bonus interest or extra rate, use that to your advantage. But don’t let the extra rate blind you to risk. -
Track the Company’s Financials and News
Unusual events like defaults, regulatory problems, shortfalls in provisions should be red flags. -
Tax Implications
Interest earned is taxable. If interest surpasses certain amounts, they will deduct TDS. Make sure to factor in tax to get your net return.
Recent Data & Shriram Finance’s FD Performance
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In April 2025, Shriram Finance revised its FD rates; the announcement noted their credit ratings (“[ICRA]AA+ (Stable)” and “IND AA+/Stable”) as continuing strong. The Economic Times
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The interest rates for fresh/renewal deposits range (as on May 2, 2025) from ~ 7.39% p.a. for shorter tenures (12 months) up to ~ 8.40% p.a. for longer ones (36-60 months), depending on compounding frequency etc. The Economic Times+1
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Minimum deposit is often around ₹5,000. INDmoney+1
When Might Shriram Finance FD Not Be Safe / Less Suitable
Here are situations / investor profiles for whom Shriram FDs may be less suitable:
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If you need liquidity soon (within a year) and don’t want to incur penalties or lose interest.
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If you are extremely risk-averse and prefer maximum safety (banks, government securities) even if returns are lower.
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If you want insured investment (banks with DICGC cover).
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If exposure to NBFC sector risks (macroeconomic slowdown, fuel price inflation, interest rate hikes) worries you.
Conclusion: Balanced View
Putting it all together:
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Yes, Shriram Finance FDs are relatively safe for NBFC corporate fixed deposits, thanks to its good credit ratings, regulatory oversight, and its reputation. They are not risk-free, especially compared to bank FDs with deposit insurance.
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For investors who want higher returns than bank FDs and are okay taking a bit more risk, SFL FDs can be a good option, provided due diligence is done.
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For safety-first investors, combining bank FDs for a portion of your funds and using Shriram FDs for another portion (with shorter tenures) could give a good risk-reward mix.
