Company FD

A company FD, also known as a company term deposit, is a kind of fixed deposit provided by corporations such as finance companies, home finance firms, or other types of NBFCs.

For many businesses, company FDs are an excellent means to raise capital from the general public. A number of rating agencies, including ICRA, CARE, and CRISIL, evaluate the credibility of these term deposits.

Characteristics of the Company Fixed Deposits

• Corporate FD comes with a credit rating from reputable rating agencies like ICRA, CRISIL, and CARE. The rating will indicate a higher chance of default in the interest and principal payments and so helps the depositor in determining the financial institution's creditworthiness.
• Depositors could also ask for a premature withdrawal from the companies. Most of the HFCs and NBFCs charge a penalty rate on public deposits. However - particular public deposits have a three-month lock-in or fixed term where the deposits can't be withdrawn.
• The loans against corporate Fixed deposits are also open to depositors in both - cumulative and non-cumulative Fixed Deposits schemes. However - some financial institutions levy a premium over the entire fixed deposit interest rate.
• The interest income earned on corporate FDs is taxed based on the depositor's tax bracket.
• Depositors can also pick from the options of interest pay-out alternatives given by NBFCs or HFCs on their requirements. There are monthly, quarterly, half-yearly, and annual pay-out options that are open.
• Depositors could also choose the cumulative Fixed Deposit option where the interest component is reinvested, enhancing the power of compounding. As a result - the cumulative option would help the depositor in earning better returns than non-cumulative options.
• Corporate FDs are much riskier than bank FDs since they are not insured by the deposit insurance program offered by DICGC. In the case of Fixed Deposits opened with scheduled banks, a depositor's deposits of up to Rs. 5 lakh that is held with each scheduled bank are protected from adverse events such as bank failures under the depositor insurance program.

Company Fixed Deposit Rates

Factors to Choose the Best Corporate FD

Examine credit rating: All fixed deposits given by various organizations include a credit rating established by institutions such as CRISIL. These ratings will help you decide whether or not to invest with them.

Check the minimum and maximum amounts: Since most companies establish the minimum and maximum amounts that can be put into an FD, it is best to double-check them. If you want to start an FD with Rs.25,000 but the company you chose requires a minimum of Rs.50,000, you're in trouble.

Examine the following interest rates: It is critical that you research and compare interest rates before deciding on one. Certain NBFCs provide greater interest rates for the same tenure as others.

Advantages of the Company Fixed Deposits

• Higher interest rates: The interest rate is the best feature of a corporation FD. The rates paid are far greater than those offered by a typical bank FD.
• Payment alternatives for periodic interest: There are several interest payment options available, including monthly, quarterly, half-yearly, and yearly.
• Almost all business FDs are graded by independent agencies such as ICRA, CRISIL, and CARE. This gives customers the option of selecting a highly-rated FD.
• Easy loans: The majority of company FDs offer easy loans of up to 75% of the maturity amount. The penalty for early withdrawal is modest, providing another alternative for quick liquidity.

Characteristics of Top Company FDs

Mahindra Finance FD

• This program has a greater interest rate than the others.
• Senior folks can earn an extra 0.25% per year on savings up to Rs.1 crore.
• CRISIL rates it FAA, indicating high-interest payment safety.
• Non-cumulative interest is paid yearly, biannually, or quarterly via NACH/NEFT.
• The compounded interest is then deducted from the tax bill.

LIC Housing Finance FD

• For the yearly option, the minimum deposit amount is Rs. 20,000.
• For cumulative deposits, interest will be compounded annually.
• For the yearly option, the depositor can make extra installments in multiples of Rs. 1,000.

Kerala Transport Development Corporation FD

• This FD scheme is guaranteed by the Kerala government, which greatly decreases the risk of investing.
• This program provides the depositor with a renewal option.
• With this arrangement, senior citizens receive an additional 0.25% interest advantage.
• The first deposit is Rs.10,000.

Shriram City Finance FD

• This scheme offers simple withdrawal choices as well as a variable tenure.
• The initial deposit is Rs.5,000.
• The plan is available in both cumulative and non-cumulative forms.

FAQs

Q1. Is it possible to leave the company early?

Yes. The deposit can be withdrawn before the maturity period, but some NBFCs require a longer minimum investment period of 6 months to a year.

Q2. What is the distinction between a bank FD and a corporate FD?

In terms of distinctions, both are FD accounts with identical features. Bank FDs are generally thought to be safer and yield lower interest rates.

Q3. How is interest paid to depositors?

Interest payments will be electronically credited to the customer's bank account based on the frequency of interest payments selected.

Q4. What is the process to apply for a corporation FD?

You can apply for a corporate FD online or by contacting the company in which you want to invest.

Q5. How much more interest do senior citizens earn?

Deposits made by senior persons might earn up to 0.50% more interest.

Q6. What are the housing finance companies' FD interest rates?

These are the FD schemes that are offered by companies that specialize in home finances.