Common people and investors are constantly on the lookout for secure and rewarding avenues to park their funds and corporate FD has emerged as an attractive option, offering an alternative to traditional bank FDs. This article delves into the world of corporate fixed deposits, exploring their unique features and advantages.
What is Corporate FD?
Corporate FD refers to a fixed deposit offered by corporations or companies. Corporate fixed deposits, which are similar to traditional fixed deposits provided by banks, are financial instruments that allow investors to deposit money with a corporation for a specific amount of time at a specific interest rate. At the end of the stipulated duration, the corporation guarantees the repayment of the principal amount and any income generated.
Benefits of investing in Corporate FD
Corporate fixed deposit (FD) has a number of advantages. Here are a few significant benefits:
- Higher Interest Rates: When compared to regular bank FDs, corporate FD can offer higher interest rates.
- Diversification: Investing in corporate FD gives you the opportunity to diversify your portfolio in ways other than the usual stocks and mutual funds.
- Tenure Options: Companies often provide a variety of tenure options for corporate FD, letting you choose the length of time that best meets your investment objectives. Corporate FDs are available in a range of maturities, so you can choose whether you want to make short-term or long-term investments.
- Flexibility: Corporate FDs allow a degree of investment amount flexibility. Depending on your financial situation and investment goals, you may decide to start with a larger investment or a smaller one. These FDs also provide tax benefits.
What are Corporate FD schemes?
Corporate FD schemes are investment choices that businesses provide to investors to raise money. Although the issuers of these schemes are corporations rather than financial institutions, they are comparable to conventional fixed deposits offered by banks. Corporate FD programmes give people and businesses the chance to receive a fixed return on their investments over a predetermined time frame.
What are Corporate FD interest rates?
The corporate fixed deposit interest rates offered by the bank to the account holder for investing their money in their particular bank is referred to as a corporate fixed deposit rate. Fixed deposit accounts are offered at various rates of interest by various institutions with corporate fixed deposit rates ranging from 2.5% to 9.0%.
Here are a list of FDs and their interest rates:
- Bajaj Finance- Up to 7.75% p.a.
- Mahindra Finance Ltd FD- 7.40% – 7.75%
- Shriram Transport Finance Ltd FD- 7.34% – 8.18%
- PNB Housing Finance Ltd FD- Up to 7.70%
- LIC Housing Finance Ltd FD- 7.25% – 7.75%
- HDFC corporate FD rates can go up to 7.40%
- Housing and Urban Development Corporation (HUDCO) FD- Up to 7.50% p.a.
- Sundaram Finance Company FD- 7.25% p.a. – 7.53% p.a.
- Muthoot Capital FD- 7.50% p.a. – 7.75% p.a.
How to select the best Corporate FD?
The best corporate FD should be chosen after carefully weighing a number of variables. The following stages will assist you in the selecting process:
- Interest rates
- Comparative analysis
- Credibility, flexibility and security
What are some of the top 10 Corporate FDs to invest in 2023?
(FDs) in India based, on their historical performance and reputation, here are ten corporate FDs that have been well-regarded:
- Mahindra & Mahindra Financial Services Limited (MMFSL)
- Bajaj Finance Limited
- Tata Capital Financial Services Limited
- HDFC Ltd (Housing Development Finance Corporation)
- ICICI Home Finance Company Limited
- LIC Housing Finance Limited
- Shriram City Union Finance Ltd
- L&T Finance Limited
- Mahindra Finance Limited
- PNB Housing Finance Limited
Please note that the interest rates, terms, and conditions of these FDs can vary. It’s essential to thoroughly research each company’s offerings and evaluate your own investment goals and risk tolerance before making any investment decisions.
What is the eligibility criteria for opening Corporate/Company FD?
In India, the eligibility criteria for investing in corporate fixed deposits (FDs) can vary slightly depending on the company offering the FD scheme. Here are the general eligibility criteria for corporate FD in India:
- Age: Individuals who are at least 18 years old are generally eligible to invest in corporate FDs. Some companies may have a higher age requirement, such as 21 years or above.
- Resident Status: Corporate FD schemes are usually open to both resident Indians (individuals who are citizens of India and reside within the country) and non-resident Indians (NRIs) as per the regulations specified by the Reserve Bank of India (RBI). However, certain corporate FD schemes may be restricted to resident Indians only.
- Bank Account: Investors are typically required to have a valid bank account in their name. This account will be used for the purpose of making the investment and receiving interest payments.
Before investing in a particular corporate FD scheme, carefully review the terms and conditions provided by the issuing company.
What are the documents required for Corporate FD?
When investing in a corporate fixed deposit (FD) scheme, investors are typically required to submit certain documents for verification and regulatory compliance. Here are some commonly requested documents for corporate FDs in India:
- Identity proof
- Address proof
- KYC (Know Your Customer) form
- Bank details
It is recommended to retain copies of all the submitted documents for future reference and to ensure transparency and accountability.
Tax implications of Corporate Deposits
Interest earned on corporate deposits is taxable as per the I-T act. Your tax liability depends on the tax bracket you are in. As per the act, if the interest earned in a financial year from a corporate FD is more than Rs. 5,000, TDS will be deducted. Tax is different for senior citizens.
In conclusion, corporate fixed deposits (FDs) present investors with an alluring chance to diversify their investment portfolios while earning fixed returns. Corporate FDs offer a stable income stream and tenure flexibility, with possibly greater interest rates than standard bank FDs. Investors should, however, thoroughly evaluate the creditworthiness of the issuing companies, take into account the risks involved, before investing in corporate FD.
Corporate fixed deposits involve some risk because they depend on the issuing company’s creditworthiness. Before making an investment, investors should thoroughly assess the company’s financial standing, standing in the community, and credit rating. Risks can be reduced by diversifying investments and selecting reliable businesses.
Corporate FD interest rates are normally established by the issuing firm based on a number of variables, including market conditions, the company’s financial situation, the level of competition, and the length of the deposit.
Corporate fixed-term deposits typically have a fixed term, and early withdrawals may be subject to fees or interest loss. However, under specific circumstances, some businesses might offer a premature withdrawal option.