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Sundaram Fin to reopen FD window -- Reduces deposit rates

Our Bureau

CHENNAI, Sept. 13

SUNDARAM Finance, a leading player in the hire purchase and leasing industry, will accept fixed deposits once again with effect from October 4 after a gap of more than a year-and-a-half. The company has also revised downwards its interest rate on deposit s. The new rates are 10 per cent for deposits of one-year tenure; 10.5 per cent for a two-year deposit, and 11.5 per cent for three-year deposits. Public deposits at the end of March 2000 were of the order of Rs 697 crore.

Senior company officials said the company had decided to open its deposit window in deference to the wishes of a number of depositors and shareholders, some of whom had made ``strident'' demands for the same during the company's AGM.

Asked if the FD option would increase the cost of funding, officials said in the current situation where interest rates were on rise, the rates offered were a good deal for both the company and the depositor.

Asked if there were sufficient avenues for deployment of the expected inflows (in the backdrop of a lukewarm performance by the commercial vehicles and cars sectors) officials said the opening of a deposit window was basically a debt restructuring exerci se.

Sundaram Finance would limit the amount that would be raised through debentures during the current year and rely more on deposits, the official said. As of March 2000, Sundaram Finance had Rs 349.80 crore as debentures outstanding.