Non-banking finance company Sundaram Finance announced on Thursday a 30 basis points increase in deposit interest rates for one-year tenure, while implementing a 25 basis points increase for two-three-year tenures. According to reports from The Hindu BusinessLine and Mint, the rate adjustments apply to both regular and senior citizen accounts, with the company aiming to attract more funds through enhanced deposit offerings. The revised rates came into effect from Friday, October 16, 2026, reflecting the company's strategic response to changing market conditions.
For regular depositors, the one-year deposit rate increased from 6.70 per cent per annum to 7 per cent p.a., representing a 20 basis points increase. The two-year deposit rate rose from 7 per cent to 7.25 per cent, while the three-year deposit rate increased from 7.25 per cent to 7.50 per cent. As reported by Mint, these changes reflect the company's strategy to enhance deposit attractiveness across different tenure options. The rate increases align with the company's broader objective to strengthen its deposit mobilization efforts in the competitive NBFC market.
Senior citizens will see more substantial rate increases, with one-year deposit rates rising from 7.20 per cent to 7.50 per cent. The two-year deposit rate increased from 7.50 per cent to 7.75 per cent, while the three-year deposit rate rose from 7.75 per cent to 8 per cent. According to Mint, these higher rates for senior citizens demonstrate the company's commitment to providing preferential treatment for older depositors. The 8 per cent per annum rate on three-year deposits for senior citizens represents the highest rate offered by the company, providing significant value to this customer segment.
As reported by Mint, Sundaram Finance currently maintains a deposit base of ₹6,088 crore and holds AAA ratings with a stable outlook from credit rating agencies including ICRA and CRISIL. These ratings indicate the highest degree of safety for deposits, providing confidence to potential investors. The company's strong credit profile, combined with its substantial deposit base, positions it well to compete effectively in the current interest rate environment.
The decision to raise fixed deposit rates comes after the Reserve Bank of India raised repo rate by 25 basis points to 5.50% from 5.25% on October 7, marking the first such increase since February 2023. As reported by Mint, a repo rate hike increases the cost at which banks borrow money from the central bank and influences lending and deposit rates across the financial system. Banks and NBFCs may respond by revising their rates to manage funding costs and remain competitive in the market. However, the impact of repo rate changes on deposit rates varies across institutions based on factors such as liquidity position and competitive strategy.
