Small NBFC FD!

If a small NBFC is offering high interest rates on its FD, then usually it is a red flag. Before investing, it is advisable to check its rating and do due diligence on its business fundamentals. Don’t invest in NBFC FDs with a rating lower than AA. Mandated insurance cover of Rs.5 lakh is not applicable to private FDs. It is better to get lower interest rate than facing capital erosion. Besides the difference in rates is by few basis points which is really marginal considering the risk you are taking.