Should you invest in -
Sundaram BNP PARIBAS Home Finance Limited - Fixed Deposits
Sundaram BNP PARIBAS Home Finance Limited (SBHFL) is a strategic partnership between Sundaram Finance Limited and Union de Credit pour le Batiment (UCB) (a wholly-owned subsidiary of BNP Paribas, France).
Sundaram Home Finance Limited was incorporated on July 2, 1999, under the Companies Act 1956. Sundaram BNP Paribas Home combines its expertise in Home Finance with the service-orientation of its promoter Sundaram Finance Ltd. SBHFL provides the following operational advantages:
- Transparent process
- Speedy sanctions
- Personalised service
SBHFL is presently offering fixed deposits with tenure of 1 year, 2 years and 3 years, which is carrying a stable (MAA+ from ICRA and FAA+ from CRISIL) rating. The rates of interest under the respective options (cumulative and non-cumulative) are as under:
| Period |
Cumulative |
Non-Cumulative |
| Payout on Maturity (Quarterly rests) |
Quarterly Payout |
Monthly Payout |
| Minimum Amt |
Interest Rate
(% p.a.) |
Effective Yield
(% p.a.) |
Minimum Amt |
Interest Rate
(% p.a.) |
Minimum Amt |
Interest Rate
(% p.a.) |
| 12 |
10,000 |
7.50 |
7.70 |
10,000 |
7.50 |
10,000 |
- |
| 24 |
10,000 |
8.50 |
8.60 |
10,000 |
8.00 |
10,000 |
- |
| 36 |
10,000 |
9.00 |
9.57 |
10,000 |
8.50 |
10,000 |
8.44 |
(Source: Offer document)
* Interest payment for monthly payout option will be made on 10th of every month, and in case of the quarterly option interest payment will be made on 10th of March, June, September and December every year.
The interest payment will be made through crossed account payee interest warrants, cheques or Demand Drafts (DDs). The ECS option will be available for depositors in Chennai and Bangalore, under the monthly payout option, whereby the periodical interest will be credited directly to the depositor’s bank account.
Key Scheme Highlights:
- Additional amount will be accepted in multiples of Rs 1,000 only.
- Interest and maturity value payments are subject to deduction of tax at source, wherever applicable.
- All cheques and drafts should be drawn in favour of "Sundaram BNP Paribas Home Finance Limited", payable at all places where SBHFL has branches.
- Loans may also be availed against public deposits, upto 75% of the deposit amount carrying interest @ 2% per annum (compounded at the same rest as of TDR) above the contracted rate, 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:
| Period Exceeding |
But less than |
Applicable interest rate |
| 3 Months |
6 Months |
Nil |
| 6 Months |
Period of deposit |
The interest rate payable shall be 2% lower than the interest rate applicable for the period for which the deposit has run or if no rate has been specified for that period, then 3% lower than the minimum rate at which the public deposits are accepted by the Company. |
(Source: Offer document)
- Only in the event of death of a depositor, the deposit may be repaid prematurely (if required) 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 in force upto the date of repayment.
FINANCIAL HIGHLIGHTS:
| Company/Parameters |
F.Y. 2009 - 10 |
| SBPHF |
LIC Hg. Finance |
HDFC |
PNB Hg. Finance |
| Debt/Equity |
8.92:1 |
10.10:1 |
6.40:1 |
9.67:1 |
| Capital Adequacy |
18.66% |
15.00% |
14.60% |
16.93% |
| Interest Coverage Ratio (in times) |
1.28 |
1.48 |
1.56 |
1.47 |
| Cash & cash equivalents at end (in lakh) |
10,484.31 |
26,989.27 |
522,463.10 |
693.18 |
(Source: Calculated from annual reports of respective companies)
From the above highlights it is quite evident that the high financial leverage (Debt/Equity ratio of 8.92:1) of SBHFL is inline vis-à-vis its peers. Moreover, the interest coverage ratio is lowest (1.28 times) as compared to its peers. However, its capital adequacy ratio of at 18.66% looks appealing, since it is much higher than the 12% minimum regulatory (RBI) requirement.
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