What makes the Bajaj Finance Fixed Deposit a winner

What makes the Bajaj Finance Fixed Deposit a winner

Fixed deposits in India: An overview

One of the oldest forms of saving and growing wealth, FDs (Fixed Deposit) and their history is tied to the creation of the banking system in India. Banking established its foothold in the country sometime between 1906 and 1911, during the Swadeshi movement. This was the time when prominent businessmen and political leaders founded banks to preserve the public’s money. Many banks that were established then, still exist to this date. These include India Bank and Bank of Baroda, amongst others.

Post-freedom, India experienced a phenomenal growth in the banking sector. The Reserve Bank of India (RBI) and Imperial Bank of India offered extensive banking services. Apart from lending financial support to businesses, their primary motive was to preserve and secure the deposits of money made by the people. This gave birth to term deposits, popularly known as fixed deposits to preserve, protect and enhance the value of a depositor’s savings.

Today, FDs are one of the most widely used investment options in the country. They hold a prominent position in the mind of an Indian investor, primarily because they offer assured gains and aren’t linked to the market. According to SEBI Investors Survey 2015, more than 95% of the Indian population prefers FDs when they think of making an investment. In terms of preferred instruments, fixed deposits trump life insurance, mutual funds or stocks.

The highest FD interest rates in India

During 1995 to 1997, investors enjoyed the highest interest rates on their fixed deposit, which was a hefty 12.3% to 13%. Today, a rate over 7.3% is considered good.

Types of FDs

Fixed deposits are offered by banks and by companies. While bank deposits offer safety, in that a depositor gets a deposit insurance up to Rs.1,00,000, they do not offer high interest earnings. Company FDs are offered by financial institutions and non-banking financial companies and usually come with a higher interest payout. To keep your interest safe, you can choose company FDs with a high safety rating.

2017’s FD interest rate*: A snapshot

  1. Bank FDs:
    1. Central Bank:
      • Safety rating: CRISIL, FA
      • Interest rate: 7.3%
    2. HDFC LTD:
      • Safety rating: CRISIL FAAA ICRA MAAA
      • Interest rate: 7.15%–7.40%
    3. ICICI Bank:
      • Safety rating: CARE AAA FD, ICRA MAAA
      • Interest rate: 6.75%
  1. Company FDs:
    1. Bajaj Finance:
      • Safety rating: CRISIL FAAA, ICRA MAAA
      • Interest rate: 7.35–8.10%
    2. Dewan Housing Finance:
      • Safety rating: CARE AAA FD, BWR FAAA
      • Interest rate: 7.35–8%
    3. PNB Housing Finance:
      • Safety rating: CRISIL FAAA/ STABLE
      • Interest rate: 7.35–10.42%

* These rates depend on the tenor, corpus and plan selected.

What is the Bajaj Finance Fixed Deposit?

The Bajaj Finance Fixed Deposit is a company FD. This means that an investor can deposit a sum of money with Bajaj Finance, an NBFC, for a fixed term. Over this period, the corpus that is invested earns interest. Unlike bank FDs, company FDs are unsecured. This means that they carry some element of risk. But, company fixed deposits are governed by the Companies Act, Section 58A and have stability ratings to help you choose a credible one.

Take a look at how this works in reality.

Assume you are a 32-year-old professional working in a research firm. You want to purchase a new hatchback car. But, you will have to raise money to fund this purchase via an investment. So, you decide to invest Rs.3 lakh in a cumulative fixed deposit with Bajaj Finance.

Info_How to make Rs1 crore by an FD investment in 5 years

Assuming that you are getting a rate of interest of 7.8% per annum, and you invest for 3 years, you will be able to build a corpus of Rs.3.76 lakh. Here, Rs.3 lakh is the initial investment and Rs.76,000 is the interest that the amount has accrued. Since it is a cumulative fixed deposit, you can access both these components at the lapse of your tenor.

Here’s a quick look at the benefits that Bajaj Finance Fixed Deposits offer:

  • They offer safe and stable growth for your savings.
  • They can be liquidated easily in case of an urgent need of finance.
  • They offer attractive rates of return, and higher interest for senior citizens.
  • They are uninhibited by market forces. So, they provide your money more security.
  • They let you choose from cumulative and non-cumulative payouts, depending on your requirements.
  • They can be started with a nominal amount. You only need a minimum of Rs.25,000 to start one.
  • You can choose a tenor according to your investment plan.


How does the Bajaj Finance FD safeguard your interest?

Even though FDs are one of the safest forms of investment, you want to be absolutely sure that your hard-earned money is in good hands. To do this, you must pick an FD that has been awarded a high security rating. The higher the rating, the more credible the fixed deposit provider is. Broadly speaking, agencies such as CRISIL, ICRA and CARE provide various fixed deposits security ratings. So, you must make a note of this and understand what the rating means before you pick one.

Bajaj Finance’s Fixed Deposits have an FAAA rating awarded by Crisil, and MAA rating by ICRA, which is the highest possible safety rating for repaying interest and principal amount on time to its customers.

What are your options?

Essentially, fixed deposits are of two types: cumulative FDs and non-cumulative FDs. The differentiating factor is the manner in which interest is paid to you. Cumulative FDs involve accumulating the interest of the FD over the tenor and receiving it directly at maturity.

Whereas, non-cumulative FDs let you invest a sum of money and gain periodic returns (monthly, quarterly, semi-annually or annually) from it, mimicking a salary or pension. Each of these types has its own benefits. You can pick an option depending on the end goal of making the investment.

2_Info_Cumulative versus non-cumulative FDs A comparison


For example, take the case of Mr. Lalwani. He works as a CA in a reputed organisation. He realised that he wanted to raise money to fund an international holiday for his entire family. Making a direct purchase would mean that his finances would take a hit, and Mr. Lalwani wasn’t in favour of this. He also didn’t want to borrow a loan. So, he decided to invest a sum of Rs.4 lakh in a non-cumulative FD, with a good interest rate of 7.85%, for a period of 4 years.

At the end of the tenor, he earned an accumulated interest of Rs.1.4 lakh over and above the invested corpus, thus enabling him to fund a holiday. Consider this: Had Mr. Lalwani invested the same amount for the same duration, at the same rate of interest for a monthly payout, his accumulated interest would have been Rs.1.25 lakh.

As you can see in this example, Mr. Lalwani’s need wasn’t immediate. Hence, cumulative FDs suited his purpose the best. Similarly non-cumulative FDs could come handy for other purposes like for senior citizens who want a periodic payout for lifestyle expenses.

How to choose the right FD

You can choose the most convenient FD based on various factors; for example, by considering interest rates, examining your needs, the payout convenience, liquidity and so on.

Here are some ways to decide on the FD:

  1. By interest rate: The interest rates for FD will vary from one financial institution to another. But, before you decide on one, make it a point to scan the market thoroughly. This will introduce you to various interest rates, which you can then compare. Accordingly, select a lender that offers you the best rate. Even a minor difference in interest rates will impact your fund’s growth.

3_Info_Bajaj Finance's FD interest rates

For example, if you invest Rs.5 lakh in a fixed deposit with a rate of interest of 7.5% for one year, at the end of the tenor, you will have Rs.5.37 lakh. But, if you invest the same amount in an FD that offers 8.10%, the amount at the end of the tenor will be Rs.5.40 lakh.

  1. By payout convenience: There could be various formalities to perform when you are getting the interest payment. This could include paperwork, or payment of certain charges. You should select a lender that offers the quickest and fastest payout.
  1. By liquidity: Not all fixed deposits are liquid. Some lenders have strict policies that levy fines or penalties for withdrawing an FD before its maturity date. If liquidity is a priority for you, refrain from investing with a lender that has your money locked down for the duration of the tenor.
  1. By examining your needs: Ask yourself why you are investing in an FD. Is it to purchase a vehicle? Is it for retirement? You can then select an FD that matches these requirements.

How to have the figures at your fingertips?

The key to understanding which fixed deposit is best for you is to have all the facts and figures accessible at a glance. A smart way of doing this is to use a FD (Fixed Deposit) Calculator. You have to input the investment amount, interest rate, and tenor, and choose between cumulative and non-cumulative payouts. Then, the calculator will tell you how much you will have at the end of the investment period in a matter of seconds.

6_Info_Benefits of using an FD calculator

Take a look at the FD calculator’s many benefits:

  • View your returns: Since the calculator has fields or sliders to adjust the tenor, principal and interest rate, it shows you how your investment’s gains will vary when the variables change.
  • Choose the right tenor: Since it shows you the returns at various tenors, it enables you to select one that matches your expectations with regards to returns.
  • Easy comparison: An FD calculator gives you results in mere seconds, and so, it makes light work of comparing various fixed deposits. With its results, you’ll be able to pick the best fixed deposit easily.
  • Easy to use: These calculators have user-friendly interfaces that make them easy to use. You have to just fill in a few details to get an overview of the prospective investment.
  • It is accurate: Unlike doing the calculation manually—which is a long and complicated process—using a fixed deposit calculator is much simpler. Since a computer carries out the mathematical calculation, there is also no room for error. You will get accurate results every time. The same can’t be said for when you do the calculations manually.

How to save tax on your Bajaj Finance FD

The returns you earn from a fixed deposit are taxable. However, several investors are unaware of the tax rules that govern this investment. Here’s a look at what you need to know:

  • If your total income, including returns from fixed deposits, is lower than the taxable bracket, don’t have to pay any tax on it. As long as you submit form 15G/15H, you can avail this benefit.
  • In all other cases, the interest earned will be taxed at the same rate as your income, if it crosses Rs.5,000/Rs.10,000 (depending on the financial institution). This means that it can be taxed up to 30%.
  • You can also save tax by filing declaring your returns. Even if you have invested in a cumulative fixed deposit, declare the interest income each year. This is because your lender is probably deducting TDS and depositing it against your PAN. Doing this will avoid inconsistent details in your tax credit statement.
  • Opening multiple FDs in various banks or bank branches is not a good way to save tax. This is because the IT Act takes into account your total earnings from fixed deposits in a year. This is an aggregate figure and includes all the FDs in your name.
  • It is also believed that you don’t have to pay tax if you invest in the name of your non-working spouse, child or any other family member. But, this is a myth. The interest income will be added to your bracket and will be taxed according to your tax slab.
  • If you invest in a tax-saving FD with a lock-in period of 5 years, you get an exemption under section 80C. According to this section, the amount invested is exempted up to Rs.1.5 lakh per year.

12_Info_Who can open an FD with Bajaj Finance

Why should senior citizens choose the Bajaj Finance FD?

Senior citizens need to find a way to secure their future financially. To do this, they must make investments that are flexible and at the same time offer decent returns. Their investment instruments must be secure and mustn’t require constant monitoring.

Also, since they don’t have a steady income, senior citizens need an investment that is not linked to market forces, as they don’t have the earning capacity to offset any losses. While many investments don’t cater to these needs, fixed deposits do the job perfectly. In fact, the Bajaj Finance Senior Citizen Fixed Deposit offers a lot of benefits for senior citizens.

Primarily, the Bajaj Finance FD offers senior citizens an interest rate of 8.10%, which is much higher that what other customers get. This means that while other customers benefit from 7.85% interest rate, senior citizens get more value for the same amount of investment.

Besides this, here are the other benefits that it offers:

  • High stability and credibility: Stability and safety of income is most important for senior citizens. Bajaj Finance’s FDs feature an MAAA rating by ICRA and an FAAA stable rating by CRISIL. This ensures that your investment is in safe hands.
  • Online account management: The online account management service offered by Bajaj Finance lets you manage your fixed deposit easily, from the convenience of your home.
  • Doorstep service: It is tiresome for senior citizens to wait in long queues and complete formalities. But, this shouldn’t deter you from investing in FDs. So, when you opt for Bajaj Finance’s FDs, you have the option to call a representative home and complete the application procedure.

Minimal deposit amount: You only need a minimum of Rs.25,000 to start this fixed deposit.


How does your FD become a tool for financing?

You can use your FD to get finance in the form of a loan. You can get a loan of up to 75% of the loan value. The interest rate that you have to pay will be at least 2% higher than what you’re gaining from your fixed deposit.

4_Info_How to take a loan against your FDs

Take a look at a few of the advantages a loan against a fixed deposit offers:

  • It averts the risk of submitting valuable assets as collateral. Hence, you can keep assets like property protected.
  • Loans against FD usually come with easier application formalities since you are submitting your FD as collateral. This means that your loan will be approved faster.
  • If you have a non-cumulative FD, the monthly returns can be used to pay a small portion of your loan’s EMI, thus lowering the repayment burden.
  • Also, these loans have lower interest rates since you are submitting some form of collateral.

How does an FD provide liquidity?

Liquidity is an important aspect of any investment option. Liquid FDs enable you to raise money instantly in cases of emergencies. The Bajaj Finance FD features flexible premature withdrawals. This means that no matter what your emergency, you can use the money from your FD. But, some FDs require you to pay hefty charges when you want to exit your deposit prematurely. Read the fine print to avoid this from costing you.

How much income should you park in your FD, based on your risk capacity?

How much you should invest in fixed deposits will vary from investor to investor as it depends on your risk appetite. While investors with a good risk appetite might consider investing less money in FDs and more in market securities, investors with a low risk appetite will do just the opposite. Here’s a quick run-through.

10_Info_Fixed deposits vs mutual funds

  1. If you are a conservative investor: If you like to play it safe and invest heavily in low-risk options, invest less in market related securities like mutual funds or equity and more in an FD.
  1. If you are a moderate risk investor: If you are a moderate risk investor, you usually like to gain from having a diverse investment portfolio. You try to maintain a 50:50 mix by investing equally in both high-risk and low-risk investments. So, you should consider investing equally in fixed deposits and other instruments.

9_Info_Fixed deposits vs stocks

  1. If you are an aggressive investor: If you seek large capital gains in a short or medium term and have a big risk appetite, you are an aggressive investor. So, you must focus more on investment options like equity and mutual funds, and add fixed deposits to your portfolio as a secondary option or safety net.

Calculate FD Maturity Amount Invest in FD Check FD Interest Rate

Why You Need More Retirement Money Than You Think

Most of us set aside a part of our salary for retirement, but this may not be enough. It is certainly a step in the right direction, but not one that will ensure absolute financial security. With rising expenses and higher health-care costs, savings alone won’t allow you to financially provide for your retirement as comfortably as you had anticipated.

Read on to Find out Why You Need More Money for Retirement than You Think

Higher Life Expectancy:

In the past two decades, life expectancy in India has increased by 10 years. According to the World Statistics Report 2016, in the 1990s, the average life expectancy in the country was 58 years.
In 2015, this number rose to 68.5 years. So, planning for retirement today in the same capacity as your parents did will no longer be sufficient for you. While better life expectancy is a good sign, it does mean that you have to finance the extra years that you will spend as a retired individual. In this case, you must finance an additional ten years and hence need more money than you had foreseen.

Forced Early Retirement:

When planning your finances, it is wise to factor in all eventualities. An effort in this direction is to also plan for early retirement, whether it is by choice or a product of circumstances. You must always have a buffer when it comes to your retirement fund.
So, if you choose to or need to retire early, years of financial planning don’t go to waste.
A simple way to begin planning for your retirement is to make good use of your provident fund. Often taken for granted, you can use this basic provision to build your retirement corpus.

For example, instead of simply using your PF amount on maturity, invest it in a non-cumulative fixed deposit. You’ll be able to multiply your funds with a fixed deposit account and receive a payout at a frequency of your choosing at the same time. Take care to pick a superlative FD (Fixed Deposit) such as the one offered by Bajaj Finance. It offers a high rate of interest, going up to 8.20% for senior citizens, along with a flexible tenor.

Rising Health Expenses:

As of 2014, according to the National Sample Survey’s Office, only 32% of urban Indians choose public hospitals over private ones. Needless to say, as an average Indian citizen, you’re spending heavily on healthcare. Besides, from 2004 to 2014, average medical expenditure when you are hospitalized has increased by 176% if you live in an urban area and over 160% if you reside in rural India.
Assuming that this is the pace at which health expenses will rise, you will need more funds to get access to quality healthcare. As a result, you must set aside more money for post-retirement medical expenditure. Not only are ailments more frequent as you age, they are also likely to cost more.

Rising Inflation:

At the start of 2017, inflation in India was 3.17%. Towards the end of the year, in November, this figure had sharply risen to 4.88%. Apart from the fact that inflation is ever increasing, it is also important to understand that often, inflation is higher than the market forecast for that month.
For example, while inflation in November clocked in at 4.88%, it was expected to be lower, at 4.2%. Since the cost of goods and services is steadily rising and your money’s value is dropping, you need to generate a lot more wealth to be able to nullify the impact of inflation and maintain your standard of living.

Post-retirement Plans:

After retiring, you may decide to focus on your health, take up a hobby or travel the world. Depending on what your plan is, you will have to account for the funds to realize your goals. For example, if your mission is to travel extensively, you will need more funds at your disposal.


To avoid shortage of funds, it is best to plan beforehand, and opt for the best investment plans that suit your needs. You can always put your money to work, and boost your income with the right investments. Use our easy FD Calculator to calculate maturity amount.

Calculate FD Maturity Amount Invest in FD Check FD Interest Rate

Tips To Protect Your Retirement Funds Post Inflation

Preparing for retirement is a financial task that deserves your undivided attention. Meeting your monetary needs is of primary importance, but you must also take all the necessary measures to ensure that your money gives you the best returns possible. To do this more efficiently, it is imperative that you factor in projected inflation, and work on your post-retirement finances accordingly.

Here are 5 Tips that will Help You Beat Inflation and Enjoy a Financially Comfortable Retirement.

1. Review Your Portfolio:

Investing your savings to finance your retirement needs constant supervision. Although you’re working towards a long-term goal, you must review your investment portfolio from time to time to make sure that your money is working as hard as it can. This involves keeping two things in mind.
First, you must see how volatility or inflation has the potential to affect your funds, and alter your portfolio accordingly. Secondly, even when you’re caught in a volatile market situation, you must view your investment objectively, with the end goal in sight.
When you invest for the short term, you need to constantly make modifications to ensure that your net financial outcome is greater than your investment corpus. But, when you invest for the long term, you have the option to weigh your decisions. While a balance between the two is key, remember that market conditions will change. And, making a series of rash decisions will cost you more than they will help you.

2. Shift To Stocks:

While parking your entire retirement fund in stocks is far from advisable, investing a part of your money in stocks is ideal. This will give you returns that help counter inflation. But, the important thing to keep in mind is picking the right stocks to invest in.
Pick stocks of companies that enjoy pricing power during inflation, as it leads to increase in the stock’s price.
For example, let’s assume that you pick a stock of a grain company. During inflation, the price of the company’s product rises, which leads to higher revenues for the company. Eventually, this results in a boost to the stock’s price. But, this doesn’t hold true for stocks of companies across industries.

3. Look at Ways In Which You Can Re-Invest:

It is essential that you make every financial decision with the view of beating inflation. You want to ensure that your money multiplies enough, so that it is not a worry, even if inflation is at an alarming figure. One way of doing this is to make good use of your employee provident fund (EPF) and public provident fund (PPF) money. Most of us take these PF instruments for granted. But, when the matured amount is invested correctly, you can use it to get income that acts as a hedge against inflation.
Instead of depositing the lump sum into your account, why not re-invest it in a non-cumulative fixed deposit? This way, not only will your money grow further, it will also give you timely payouts, thereby replacing a salary. A non-cumulative FD that can help you make good use of your provident fund’s maturity amount, is one offered by Bajaj Finance.
This FD (Fixed Deposit) offers high returns, and has an excellent stability rating. It offers payouts on a monthly, quarterly, semi-annual and annual basis. It also gives you flexibility with regards to the investment amount and tenor. You can check maturity amount anytime by using online FD Calculator.

4. Consider Commercial Property

Typically, the value of commercial real estate keeps rising, even if the market isn’t performing well. So, along with investing in stocks, think about investing in commercial property. If lack of finances keeps you from an outright property purchase, you can invest in a mutual fund that invests in commercial real estate. This will balance out your investment portfolio and act as protection against ever-increasing inflation.

5. Study and Research Financial Matters:

Instead of following what your peers are doing or what your financial consultant advises to you, make sure you read up on the outcomes of your decision before making one. Also, before you commit to a financial plan, make sure you factor in all the possible outcomes, assess how much risk you can take and only then move forward.

Even when you decide on a course of action, do your research to ensure that you’re taking the necessary measures to ensure a positive result. For example, investing in stocks with the view of beating inflation is not enough.
Suppose you pick a retail stock, for instance. It will not be as beneficial as the grain stock. This is because the former is an industry that people tend to neglect during times of inflation. As a result, it isn’t the best place to park your money. Doing adequate research will help you familiarise yourself with these investment nuances.

These 5 tips will help you keep inflation at bay, and ensure that your retirement is planned for.

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What are the Benefits of MSME Loan

What are the Benefits of MSME Loan

Every small business needs financial assistance at some point. Most Micro, Small and Medium Enterprises (MSMEs) usually require some sort of financial assistance when they are moving up the growth curve. The money may be needed for purchasing essential equipment, upgradation of infrastructure or for meeting operating expenses. Where the money comes from is totally the discretion of the owner and his/ her priorities. Many different businesses have the option of procuring financing from various borrowing instruments.

But, when it comes to MSMEs, the preferred route taken to address financial needs is an MSME loan in India. Let us look at the factors which have made MSME loan so popular among small businesses in India.


Running a business in the Indian economic scenario can be challenging. Due to seasonality of demands and various other factors, there can be times with surplus of funds, while sometimes every penny can make a difference. When the latter situation arrives, funds will be required to be deployed on an urgent basis.

Availing MSME loan is easy and hassle free. There is not much time taken to disburse the loan amount and documentation is also minimal. The processing time is very quick; companies like Bajaj Finserv have approval times as low as hours. There is also online account access, which lets you access your account statement and loan details on the go.

Full Control

A small business will also need to address the financial requirements of the company in the course of doing business. Finance is not easy to procure, and other sources of loan such as angel investors and venture capitalists offer finance but also seek to control part of the company in return.

A small business owner may not look forward to relinquishing control of the business MSME loans are specifically designed to meet such requirements of small businesses. They are an excellent source of finance for business owners who wants to avoid liquidation of control

Reduced Interest Rates

In a business environment, the more money one has on hand, the better positioned he/ she is to take on the risks that come along the way. MSME loans, with their competitive interest rates, ensure that only the minimum amount is spent in repayment of the loan, and the rest is available for other business needs.

No Strings Attached

MSME loans do not require collateral from companies to be eligible for it. The nature of small business is such that they are ‘asset light’ and can’t afford to keep their equipment as collateral.

Small businesses cannot pledge their valuable resources to banks for cash, as this can have adverse impact on their productivity, if something goes wrong. MSME loans, thus, turn out to be an ideal source of funds when the need arises.

Short-term Commitment

MSME loans are mostly utilised for short-term requirements by small businesses. This arrangement provides a certain amount of flexibility to the borrower, as there is no long-term commitment required on his/ her part. Having a short-term commitment also allows the management room to manage the cash flow and allocate available resources efficiently.

In Conclusion

MSME loans come with great benefits for small businesses. They also give hope to those who have great business ideas and a desire to have a business of their own. At Bajaj Finserv, we not only offer MSME loan at competitive interest rate, but with a host of other value-added features like no collateral, fast processing cycle and online account access, we meet the exact needs of small businesses at any stage of their growth.

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What's the Difference Between a Start-up and an SME?

What’s the Difference Between a Start-up and an SME?

When the word ‘start-up’ comes to mind, most people visualise a small business with 10-15 employees working in a corner office with a vision of changing the world. This image, though not wrong, does not adequately convey what a start-up is in the truest sense. It also leaves a lot of scope for confusing a small business with that of a start-up.

There are a lot of reasons as well – entrepreneurs start both these business types, and both have low employee count and low revenue. So, what makes them different. We begin explaining by stating their definition.


A start-up is defined as a ‘temporary organisation that is searching for a repeatable and scalable business model’. According to the Ministry of Commerce and Industry, Government of India, it is:

  • A registered entity not more than 7 years old
  • Has never crossed an annual turnover of Rs. 25 crore in any preceding financial year
  • A company working towards innovation and development of products or services that have high potential of wealth creation or employment generation

An SME (Small and Medium Enterprises) is an ‘independently owned and operated enterprise, designed for profit and sells known products to known customers in local markets’. In India, the SMEs are further sub-divided into a manufacturing and service enterprise. For manufacturing, the investment ranges from Rs. 25 lakh to Rs. 10 crore, and in the service enterprise, the investment varies from Rs. 10 lakh to Rs. 5 crore.

Business Objective

A start-up starts small but has a very big vision. It has come into existence to prove that the business model can have a huge impact on the current market. From the onset, start-up founders have a vision to grow their firm into a large, disruptive company that will rearrange an existing industry or create a new one altogether.

SMEs or small businesses follow a tried and tested path and don’t travel off it. They are structured organisations that follow a known and established business model. Founders of small business are focused on gaining profits by delivering value to their customers. The best way to achieve this is by following a stable and successful business model and by securing a financially viable position in the market for a long period of time.

Funding and Control

Start-ups are in a hurry to prove that their business model is viable, and for this, they require funding. Start-ups have humble origins and are founded to prove a point. The founder’s vision does not feature thoughts like retaining control of the company.

As the start-up begins to grow, it will receive funding from angel investors and venture capitalists who will buy out a stake in the company with their investments. Over a period of time, the founder’s control over the company will diminish and s/he will move on to the next idea/challenge.

Funding for SMEs is the same as that of a start-up in the initial stages. But, in contrast to the latter, the founder’s interest is in retaining control over the company. He will seek funding from various financial institutions, such as banks, to grow his company without relinquishing control.

Risk Factor

This is one of the major difference in these two business types. Start-ups promise enormous potential, high return on investment and claims to bring revolutionary changes in the industry they operate in. Any company claiming to upend an entire industry with a novel idea is treading a path fraught with high risks.

Small businesses are not risk takers. They follow a path that has already been treaded a million times before with proven returns. Hence, they are much more stable than start-ups and offer consistent returns with a significantly lower risk profile.


Start-ups are trailblazers in their own right. They are pursuing ideas that have never been explored before. Therefore, to reach their goals, the equipment that they utilise also must be more advanced than what is already available to the industry.

SMEs don’t require cutting-edge equipment to manufacture the products or give the service that is already present in the market. Hence, they can make do with conventional technology and only upgrade their equipment, if they want better efficiency in pursuit of higher financial gains.


Both these company types are founded by entrepreneurs and might appear the same at first. However, they are as different as chalk and cheese with radically different ideas that separate them from the onset. Their stated objectives and method of working as well as of acquiring finance, further differentiates them from each other.

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Running Out of Cash? Get Help with a Business Line of Credit

Running Out of Cash? Get Help with a Business Line of Credit

Pritpal Singh, owner of a mid-sized sports goods manufacturing company in Ludhiana, was in an expansion mode. While his project was in full swing, he realised the cash he had will run out soon, thereby risking his venture. Financial prudence led him to opt for a business line of credit. “My expansion plans didn’t suffer, thanks to the timely arrival of funds,” recalls Pritpal.

Pritpal’s case highlights an essential business philosophy. In times of growth and uneven cash flow, businesses must be flexible enough to adapt to change. “A line of credit should be on the radar of a business owner when in need of ready access to cash,” opines Delhi-based financial consultant Arun Chauhan. Let’s see the various benefits offered by a business line of credit.

Short-term Funding

“This mode of finance is the best bet for short-term funding to solve a liquidity crunch. Businesses can use this for meeting various needs like upgrading machinery, replenishing inventories, and training among others,” opines Arun.

Seasonal businesses like agriculture can use this source of finance for hiring labour and machinery at the peak season. We, at Bajaj Finserv, offer an MSME / SME Loan up to Rs. 30 lakh with a line of credit facility.

A Continuous Source of Finance

A business line of credit is subject to review and annual renewal. “In most cases, the EMIs consist only of the interest component. This brings down EMIs and results in savings. Moreover, businesses need to pay interest only on the amount used,” points out Arun.

Borrowers can deposit the funds when in access and withdraw the same when required. The limit may either drop or remain constant throughout the tenor, giving maximum availability of funds. Thus, it acts as a continuous source of finance.

Flexibility of Purpose

A business line of credit addresses a wide range of financing needs. While Pritpal used it to fund expansion, businesses often use it to:

  • Buy new equipment
  • Train employees on new technology
  • Install new software

“The flexibility of purpose helps in better management of cash flow and channelize funds where its required the most,” opines Arun.

No Need for Collateral

Offering a collateral during cash shortage can be a dilemma for businesses. However, a business line of credit is an unsecured source of finance where there isn’t the need for any collateral.

Arun says, “Most businesses in India, particularly small ones, are asset-light. They have very little to offer in terms of collateral for loans. In such a scenario, a line of credit is the most prudent financial choice.”

Bajaj Finserv’s Business Loans don’t require any collateral, which means business owners don’t have to put their personal or business assets on the line. Funding is faster, easier and requires less paperwork.

Competitive Business Loan Interest Rate

A business line of credit is available at a competitive interest rate. “A competitive interest rate coupled with the option to pay on the interest component on EMIs helps organisations save funds. The savings boost working capital to a great extent,” says Arun.

We offer business loans at competitive interest rates so that enterprises can make the most of them.

Building up Credit Score

Rational handling of business line of credit improves credit score. Improving the credit score helps business owners access bigger and larger financing resources later.

“In the loan market, credit score reflects the trustworthiness of the borrower. Credit score may affect the loan amount and rate of interest,” says Arun.

In a dynamic environment, running a business is a challenge. Depending on the need, a line of credit is ideal to overcome liquidity crunch for smooth operations.

If your business needs an infusion of cash to cover working capital or other needs, choose a Business Loan with a line of credit from Bajaj Finserv. With loan up to Rs. 30 lakh, nominal interest rates, the freedom to borrow and repay as per your needs, and interest charged only on the amount utilised, this is the ideal means of financing for growing businesses.

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Differences Between a Business Loan and Business Line of Credit

Differences Between a Business Loan and Business Line of Credit

Funds are the lifeblood of a business. They are the fuel that keeps it running. Knowing the difference between the various modes of finance is important for business owners seeking funds to grow their venture.

An in-depth study of the various financing options with actual requirements is essential before securing funds. If not, it may result in either inadequacy of funds or serving unnecessary debts. Business loan and line of credit are two most popular modes of financing available in the market.

Here is a comparative study between the two.

Usage Cycle

While organisations can use a term business loan only once, they can utilise a line of credit many times according to their needs. A line of credit gives business owners the flexibility and freedom to use the funds when required. This is one of its biggest advantages. Thus, it prevents idling of funds.

We, at Bajaj Finserv, offer a business loan up to Rs. 30 lakh with a line of credit facility.


Generally, a business loan is a source of finance utilised for a specific need, for example purchasing machinery. On the other hand, a line of credit can serve various purposes. Organisations use a line of credit as a continuous channel of finance for a range of business requirements.

Business owners can use a Business line of credit to upgrade existing equipment, train employees, scale up growth, and much more. The purposes are diverse and depend on immediate business need.

Mode of Payment

Business loans usually follow a periodic cycle. But, in case of a line of credit, the payment depends on the amount of funds used.

The mode of payment of a line of credit generally consists of the interest amount and not the principal component. This reduces monthly EMIs, thereby helping business owners to save big. Thus, they can build on their existing capital.

The line of credit offered in Bajaj Finserv’s Business Loan allows business owners to repay the principal at the end of the tenor. Thus, it acts as a big savings arm in cash flow.

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Improve Your Cash Flow by Taking Equipment Loan

Improve Your Cash Flow by Taking Equipment Loan

Equipment loans have emerged as a vital financial instrument for modern businesses. By providing funds to invest in modern machinery, it helps a business to stay technologically competent. These loans are tailor-made to address two critical aspects of a business – machinery and cash flow.

A steady cash flow helps a business grow in the marketplace. It helps in business expansion and also aids in mitigating the effects of liquidity crunch.

Let’s understand how an equipment machinery loan helps in enhancing cash flow.

Buying More Efficient Machinery

Modern businesses bank on shorter production cycles with increased efficiency. This improves the quality of service offerings, which adds to the goodwill of a business. An equipment loan can be used to buy efficient machines that:

  • Consume less energy
  • Make effective use of raw materials
  • Boost productivity
  • Can work for long hours without breakdown

Such machines help in saving running cost, which helps in improving cash flow to a large extent. Companies like Bajaj Finserv offers equipment loans as high as up to Rs. 30 lakhs so that businesses can purchase the best technologies available.


Businesses can also use an equipment loan to lease equipment. For example, seasonal agriculture-based industries can lease required machinery during the harvesting season.

Leasing saves businesses the cost of owing and maintaining machines on a permanent basis. This can use these savings in other areas of business to boost revenue.


Maintenance is a key aspect of seamless performance. Machines, both heavy and light, undergo constant wear and tear. Hence, it’s imperative to maintain them in top condition for best performance. A major breakdown may result in huge loss for a company.

Businesses can avail loans to buy high value spare parts and consumables for the maintenance of machines. It helps in saving cost by eliminating equipment downtime and machine inefficiencies.

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