Corporate FD
Corporate Fixed Deposits or Company Fixed Deposits are saving cum investment tools offered by Non-Banking Financial Companies or NBFCs.
These corporate or company fixed deposit schemes are backed by higher FD (as compared to bank FD rates) interest rates.
Here, we shall compare FD rates as well as the features and benefits offered by various company fixed deposits. Also, the most important question in investor’s mind, “Should I Invest in a Company FD?” would also be addressed.
Whenever you choose fixed deposits over the other investment options, the prime motive remains the safety. Although company fixed deposits are safe, they somehow lack behind from bank FDs. Except for higher yield, these FDs have less to offer.
If you have short-term investment goals but don’t want to deviate towards riskier options like shares or mutual funds, go for company FDs.
Companies offer higher interest rates than the average bank FD rates. This leads to better yield. This is so because company FDs are not covered by the DICGC (deposit insurance of up to Rs. 5 lakh which is only for bank FDs) and they want to attract investors with something solid. Credit health of these con-banking financial companies (NBFCs) is determined by the various credit-rating agencies like CRISIL, ICRA and CARE. Before investing, check for an average “Stable” rating by credit-rating agencies. If it’s going down, step away.
These deposits have a CRISIL FAAA rating indicative of potentially low risk or high
Minimum deposit amount allowed is worth Rs. 5,000 (cumulative)
Senior citizens get an additional 25% interest in Samruddhi deposits and 0.10% for Dhanvruddhi deposits
Eligible investors include Resident Indians, companies, non-resident Indians, partnership firms, trusts and foundations, charitable trusts, HUFs, family trusts, sole proprietors and club/association/society
Interest is directly paid to the account holder via NACH/NEFT*
Potentially low-risk investment due to the high credit rating of FAAA (Stable) by CRISIL
Minimum deposit amount required for Rs. 10,000
Can be applied by resident individuals, NRIs, Hindu Undivided Families, private limited companies, trusts,
co-operative societies and associations of persons
Cumulative and non-cumulative (monthly/annually) interest payment options available
No TDS applicable on interest earned up to Rs. 5,000 in a financial year
Premature withdrawal allowed after 3 months from the date of opening the deposit
Loan against FD facility available up to 75% of deposit amount after 3 months from the date of opening the FD
Nomination facility available