Mahindra and Mahindra Financial Services Limited (MMFSL) one of India’s leading Non-Banking Finance Company, under the Mahindra Group, is offering fixed deposits with terms between 1 to 5 years. The fixed deposit has also been conferred a FAAA/ "Stable" rating by CRISIL, which thus indicate high safety.

 

MMFSL has a vast network of branches, through which it provides personalised finance for the widest range of utility vehicles, tractors, cars, three wheeler, two wheeler, commercial vehicles, construction equipments and even housing loans, by focusing on the rural and semi-urban areas of India.

 

MMFSL’S rural financing is considered as the cornerstone of poverty reduction, rural development and inclusive growth in many parts of the country. With a majority of our country’s population living in rural India, the company’s loans to over 10,00,000 customers belonging to the low income groups has proved to be a catalyst in helping rural India surge ahead in a big way.

 

MMFSL is offering two fixed deposit schemes detailed as follows:

* Senior Citizens & Employees will get an additional rate of 0.25% per annum
# Interest payment for half yearly option will be made on 30th September and 31st March only through ECS/NECS/NEFT.
Interest payment for quarterly option will be made on 30th June, 30th September, 31st December and 31st March only through ECS/NECS/NEFT

 

Key scheme highlights:

 

• Additional amount will be accepted in multiples of Rs 1,000.
• Interest and maturity value payments are subject to deduction of tax at source, wherever applicable.
• Eligible investors: Resident Individuals, Hindu Undivided Families (HUFs), domestic companies, and minors (through their guardians only).
• Payments should be made by means of an account payee cheque/demand draft, payable to "MMFSL-FIXED DEPOSIT", payable at par at the centres where the application is submitted. Outstation cheques/drafts will not be accepted.
• Loans may also availed against public deposits, upto 75% of the deposit amount carrying interest @ 2% per annum (at half yearly rests) above the interest rate and any other additional charges as applicable on such deposits, provided such deposits has run for a minimum period of three months.
• No premature withdrawals will be allowed before the completion of three months from the date of receipt as per the directions of the Reserve Bank of India currently in force. In case of request for premature withdrawal after the expiry of three months the rate given in the table below shall apply :

   

All premature withdrawals are subjected to the prevailing guidelines of Reserve Bank of India as amended from time to time.

 

• Moreover, premature withdrawal request received 15 days prior to the maturity date will not be accepted.
• Only in the event of death of a depositor, the deposit may be repaid prematurely to the surviving depositor/s in the case of joint holding with survivor clause, or to the legal heir/s with interest at the rate that would have ordinarily been paid, had such deposit been accepted for the period for which such deposit had run upto the date of repayment.

 

FINANCIAL HIGHLIGHTS:

   

From the above table it is distinct that MMFSL’s financial leverage is well within control as revealed by its capital structure (Debt/Equity Ratio 3.7:1) and the interest coverage ratio of 2.08 times. Moreover, the Capital Adequacy Ratio (CAR) maintained by the company is the second highest amongst its peers and is also above the CAR requirement of 12% (required to be maintained by any Non-Banking Finance Company). This in a way also justifies MMFSL’s high cash holdings.

 

Investment View:

 

Based on the above financial highlights, the fixed deposit offered by MMFSL offers high safety. This scheme is an attractive investment proposition for investors’ looking to park their excess funds for 3 years. Moreover, the deposit also offers an additional interest of 0.25% p.a. if one is a senior citizen or a shareholder or an employee of MMFSL.

 

Hence at present, one may invest a portion of his/her fixed income portfolio into this corporate fixed deposit, and as the policy rates are hiked further (as expected in the third quarter policy review meeting of RBI on January 25, 2011), one may invest more into this corporate fixed deposit, as they too will offer attractive rate of interest.

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