Corporate or company FD is a fixed deposit that is issued by a finance company, housing finance company or other types of NBFCs (Non Banking Financial Companies). DICGC covers bank fixed deposits up to ₹5 lakh, but not corporate fixed deposits, so company FDs carry a higher risk.
New Delhi. Bank FD Interest Rate is often made by people in banks and every person is aware of the interest and conditions available on it, but very few people know about the company or corporate FD. know. Compared to bank fixed deposits, company/corporate FDs earn higher interest. However, there is also a high degree of risk involved.
In fact, the Deposit Insurance and Credit Guarantee Corporation (DICGC) covers bank fixed deposits up to ₹5 lakh, but not corporate fixed deposits, so company FDs are more risky.
What is Company or Corporate FD?
Corporate or company FD is a fixed deposit that is issued by a finance company, housing finance company or other types of NBFCs (Non Banking Financial Companies). But there is no credit guarantee in these. Hence before investing money in a company or corporate FD, investors should check the credit rating of these company fixed deposits to determine the legitimacy of the institution.
Higher Rating NBFCs
A company with a higher AAA rating has less chance of defaulting on interest and principal repayment. When it comes to Fixed Deposits (FDs) with AAA rated company, Bajaj Finance Fixed Deposit is rated CRISIL AAA/Stable and [ICRA] AAA (Stable) and the company now offers 7.05% for tenures ranging from 12 months to 60 months Paying an annual interest of 7.50% from Rs.
As per Mint news, ICICI HFC Fixed Deposit is rated AAA/Stable by CRISIL, AAA/Stable by ICRA and AAA/Stable by CARE. Interest of 7.00% to 7.50% is available on this FD for a period of 12 to 120 months. HDFC Limited has received AAA ratings on FDs from both CRISIL and ICRA for 28 consecutive years HDFC Company FD interest rates range from 6.85% to 7.20% for tenures of 12 to 120 months.
Tax is applicable on the interest earned on corporate FD.
The interest rates on Mahindra Finance Fixed Deposit range from 6.75% to 7.50% and it is rated “IND AAA / Stable”. CRISIL has assigned AAA/Stable rating to LIC HFL FD, and the firm offers interest ranging from 6.75% to 7.50% for tenures ranging from 1 to 5 years. For the past 30 years, Sundaram Finance Fixed Deposit has maintained an AAA rating, and offers interest rates ranging from 7.20% to 7.50%.
Corporate FD is not very beneficial in terms of saving tax, because the profit from corporate FD is taxable under the tax slab. In case of premature withdrawal, factors like lock-in period, penalty and loss of interest are also involved. Therefore, corporate FDs can be suitable for investors who do not have cash requirements in case of emergencies and want to invest for a short tenure of 1-3 years.
