Corporate FD rates have gained significant attention as investors seek higher returns on their investments. These FDs, in contrast to traditional bank FDs, offer higher interest rates. In this article, we’ll delve into the world of corporate FD, focusing on the highest corporate FD rates offered by various financial firms.
If you’re planning to invest in these FDs and want to identify the best options based on corporate FD rates, read on to gain a comprehensive understanding for making well-informed investment decisions.
What is meant by Corporate FD Rates?
Corporate FD rates refer to the interest rates offered by non-banking financial companies (NBFCs) and other corporations on their fixed deposit schemes, called corporate FDs. These rates are generally more attractive when compared to traditional bank FD rates, providing the potential for higher returns on your investment.
Unlike bank FDs, which are secured and come with deposit insurance coverage, corporate FDs are unsecured, and hence moderately risky. To evaluate the reliability of corporate FDs, credit rating agencies like ICRA, CARE and CRISIL assess them, assigning ratings based on the issuing entity’s credibility.
What are the Benefits of Corporate FD Rates?
Let’s explore the benefits of Corporate FD rates to understand why investing in a corporate FD can be a great option for you:
- Higher Returns: Corporate fixed deposits offer a significant advantage over regular bank FDs – they typically provide a higher interest rate. This difference can range from 1% to 3%, which may appear small but can substantially impact your savings over time.
- Flexibility and Liquidity: Corporate FDs often come with shorter lock-in periods and more flexibility in how interest is paid.
- Short-term Goals: If you’re saving for short-term financial goals, such as an international trip or a special gift, corporate fixed deposits can be an excellent option, as you can earn higher returns in a short period.
- Flexible Tenure: Corporate FDs also offer the flexibility of tenure for which you can remain invested. So, if you are saving for a short-term goal, you can invest for one year. If you are looking to build a decent corpus, you can invest for 5 years.
- Periodic Interest Payments: Corporate FDs provide flexibility in interest payment options, including monthly, quarterly, half-yearly, and yearly payouts.
- Credit Ratings: These FDs are rated by agencies like ICRA, CRISIL and CARE, helping you select a well-rated FD for added security.
- Emergency Funds: Corporate FDs can serve as a source of emergency funds and you can secure loans against them when needed.
- Assured Returns: High-rated corporate FDs assure returns regardless of market fluctuations, making them a dependable investment choice.
- Senior Citizen Benefits: These deposits offer a higher rate of return for senior citizens, enhancing their income.
- Lower Penalty for Premature Withdrawal: Compared to banks, NBFCs generally impose a lower penalty for premature withdrawals from corporate FDs.
Take a look at the highest corporate FD rates offered by reputed financial firms for 2023:
|Company||Credit Rating||Corporate FD Rates (% p.a.)||Additional interest rate for senior citizens (% p.a.)|
|1-year tenure||3-year tenure||5-year tenure|
|LIC Housing Finance Ltd.||CRISIL-AAA/Stable||7.25||7.75||7.75||0.25|
|Kerala Transport Development Finance Corporation Limited||Guaranteed by Kerala Govt.||7||7||6.75||0.25|
|Sundaram Home Finance||CRISIL-AAA/Stable||7.45||7.75||7.9||0.35 – 0.50|
|IND AA+/Stable by India Ratings & Research|
|ICICI Home Finance||CRISIL-AAA/Stable||7||7.45||7.3||0.25|
|Bajaj Finance Limited||CRISIL-AAA/Stable||7.4||8.05||8.05||0.25|
|PNB Housing Finance Ltd.||CRISIL-AA/Stable||7.35||7.7||7.5||0.25|
|ICICI Home Finance||CRISIL-AAA/Stable||7||7.45||7.3||0.25|
|IND AAA/Stable by India Ratings|
*Please note that the corporate FD interest rates provided are subject to change by the respective companies. These corporate FD rates mentioned above were last updated on September 8, 2023.
What are the Documents Needed to Avail of Corporate FD Rates in India?
The following documents are needed to open a Corporate FD:
- Proof of Identity and Address: You can use documents like a passport, PAN card, Aadhaar card, voter ID card or a utility bill as proof.
- Two Colored Passport-sized Photographs: Ensure you have two recent passport-sized colour photographs ready.
Additional documents for public or private companies:
- Board Resolution for FD Account Opening: This document, signed by the company’s directors, authorises the opening of the FD account.
- KYC of Authorised Signatories: This document contains details of authorised signatories, including their names, addresses, and PAN cards.
- Registration or Incorporation Certificates: These certificates verify the company’s registration or incorporation in India.
In conclusion, corporate FD rates offer an appealing opportunity for investors seeking higher returns than traditional bank FDs. However, it’s vital to remember that they do not come with the DICGC coverage available to bank FDs. Therefore, it’s crucial to diligently assess the company’s fundamentals and credit rating.
Explore various options based on the corporate FD rates and the FD tenure,and make informed investment decisions that align with your financial objectives and risk tolerance.
Corporate FD Rates FAQs :-
Corporate FD interest rates are interest rates offered by companies to individuals or institutions for investing in fixed deposits with the company. These rates can vary and are typically higher than traditional bank FD rates.
As of September 2023, Manipal Housing Finance Syndicate Ltd. offers the highest corporate FD interest rates of 8.25% for 1 and 3-year tenures, while Shriram Transport Finance Ltd FD offers 8.18% on a 5-year tenure.
The best corporate FD in India varies depending on your financial goals and risk tolerance. Consider factors like interest rates, credit ratings and lock-in periods when choosing one.
Senior citizens can earn an additional interest of 0.25% to 0.50% on their corporate FDs compared to regular investors.
Yes, interest on corporate FDs is taxable based on your income tax bracket. TDS is applicable if the interest exceeds INR 5,000, but you can use Form 15G (or Form 15H for seniors) to prevent a TDS deduction.