Should You Invest In Muthoot Finance NCDs With 8% Interest Rate – Muthoot Finance Limited is a highly popular non-banking financial company (NBFC) in India that provides various financial products and services to its customers. Muthoot Finance also issues Non Convertible Debentures (NCDs) that are quite popular among investors.
In this blog post, we will explore should you invest in Muthoot Finance NCDs with 8% interest rate. Before diving into the topic, let’s first understand what NCDs are.
What are NCDs?
NCDs are fixed income instruments that are issued by companies to raise funds from investors. These instruments have a fixed interest rate and a fixed maturity period, which means that investors know how much they will earn and when they will receive their principal back.
Should you invest in Muthoot Finance NCDs with 8% interest rate?
Muthoot Finance NCDs offer investors an enticing interest rate ranging from 6.75% to 8% depending on the tenure of the investment. The interest rate offered by Muthoot Finance NCDs is higher than what is offered by most banks on their fixed deposits, which makes it an attractive investment option for many.
However, before investing in Muthoot Finance NCDs, it is important to understand the risks associated with such investments. NCDs are not backed by the government or the Reserve Bank of India, which means that there is a risk of default by the issuer.
If the issuer defaults, investors may not receive their principal amount or interest payments on time, or at all. Muthoot Finance has a credit rating of AA+ by CRISIL and ICRA, which indicates that the company has a high degree of safety regarding timely servicing of financial obligations.
Another risk associated with investing in NCDs is the liquidity risk. NCDs are not traded on stock exchanges, and investors may not be able to sell them before maturity if they need money urgently. That being said, Muthoot Finance NCDs have an option of premature redemption, which allows investors to redeem their NCDs before maturity in case of any urgent requirement of funds.
Muthoot Finance NCDs can be a good investment option for investors looking for fixed income instruments with higher returns than traditional bank fixed deposits. Bear in mind, investors should be aware of the risks associated with such investments, including the risk of default and liquidity risk.
Before investing in any instrument, it is always advisable to do proper research and consult with a financial advisor to make an informed decision. I hope you find this post on should you invest in Muthoot Finance NCDs with 8% interest rate helpful.
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