Corporate fixed deposit is a term deposit held over a fixed period at fixed rates of interest offered majorly by Financial and Non-Banking financial companies (NBFCs). The maturities of various company fixed deposits can range from a few months to a few years.
Investors looking for returns higher than bank fixed deposits can consider corporate fixed deposits after analysing the risks. Corporate FDs have a credit rating approved by reputable organizations like CARE, ICRA, and CRISIL. These ratings help depositors evaluate the risks associated with their investments.
Is there any regulatory authority to monitor corporate deposit schemes?
According to the SBI Securities’ website, “Corporate FDs, as issued by NBFCs & HFCs are regulated by Reserve Bank of India (RBI) & National Housing Bank (NHB) respectively.”
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How to choose corporate fixed deposits?
According to the HDFC Securities website, “Here are tips for choosing a Corporate FD:
Consider these factors before choosing Corporate FD schemes to invest in.
Credit Rating: Opt for higher-rated corporate FDs based on its credit rating which indicates the underlying risk of the company.
Company Background: Assess a company’s business viability by referring to its Financial Statements, Management Discussion and Analysis (MD & A).
Repayment History: Companies repayment history helps to determine company’s credit score, credibility and stability.”
Company fixed deposit rates
| Company Fixed Deposit Rates | |||||||
| Company Name | Credit Rating | Interest Rates (p.a.) | Additional interest rate for senior citizen | ||||
| Highest Rate Slab | Applicable tenure | 1-yeartenure | 3-yeartenure | 5-yeartenure | |||
| Shriram Finance* | ICRA – AA+/StableIND AA+/Stable by India Ratings and Research | 8.47 | 50 months; 5 years | 7.59% | 8.38% | 8.47% | 0.50% |
| Mahindra Finance | CRISIL – AAA/StableIndia Ratings – IND AAA/Stable | 8.10 | 3 years; 5 years | 7.50% | 8.10% | 8.10% | 0.10%-0.25% |
| Manipal Housing Finance Syndicate Ltd. | ACUITE – ACUITE A | 8.25 | 1 year; 2 years; 3 years | 8.25% | 8.25% | 7.75% | 0.25% |
| Muthoot Capital Services Limited | CRISIL – A+/Stable | 8.38 | 5 years | 7.21% | 8.07% | 8.38% | 0.50% |
| Can Fin Homes Ltd. | ICRA – AAA/Stable | 8.00 | 3 years | 6.50% | 8.00% | 6.75% | 0.25%-0.50% |
| Bajaj Finance Limited | CRISIL – AAA/StableICRA – AAA/Stable | 8.60 | 42 months | 7.60% (FD of up to Rs 25000)7.40% (FD of above Rs 25,000) | 8.3% (FD of up to Rs 25000)8.10% (FD of above Rs 25,000) | 8.3% (FD of up to Rs 25000)8.10% (FD of above Rs 25,000) | 0.25% |
*At Monthly Rests. Additional interest of 0.25% p.a on all renewals, where the deposit is matured. Additional interest of 0.10% p.a. for women depositors.
Data as on 20th November 2024
Source: Paisabazaar.com
Risks associated with Corporate FDs
Investors should consider the risks before investing in corporate FDs. They should also keep a close eye on their investments to stay informed about the company’s financial standing and any changes to their credit ratings.
According to the SBI Securities website, “Corporate FDs carry default risk in that the issuer could default due to a variety of reasons. In such cases, the recovery of the deposit can be quite a tough and long-drawn affair for the investor.”
