- Bank FDs get more interest in corporate fixed deposits
- Corporate FD is issued by the company, its maturity period is from 6 months to 10 years.
People of our country like to invest in Fixed Deposit (FD). But instead of FD in bank, you can earn more by investing in corporate or company FD. You will get 5 to 6% interest on investing in the bank. On the other hand, if you invest in corporate FD you can earn more than 10%. Today we are telling you about the corporate FD.
What is a corporate FD?
Corporate FD also acts like a bank FD. Bank FD is issued by the bank. The interest rate is average in this. Risk is low. Corporate deposits are issued by the company. The risk in this is higher than bank FD. Actually companies work to raise capital for their needs. Companies take this capital from the investor for a fixed period, which is called corporate FD. For this, she asks the investor to invest through advertisement.
Generally companies pay more interest on this FD than banks and other finance companies to attract investors. Because, these companies have the right to take deposits under company law. Since companies have a higher interest rate on corporate FDs, it is better to invest in it.
These are the 7 best corporate FDs for investment?
|Best Corporate FD||Rate of interest (%)||Period|
|Hawkins Cooker FD Ltd||10.25-10.75||12 to 36 months|
|Kerala Transport Development Finance Corporation FD||7.75-8||1 to 5 years|
|Shriram Transport Finance FD||7.25-8.09||12 to 60 months|
|Housing and Urban Development Corporation Limited (HUDCO)||7-7.25||12 to 60 months|
|PNB Housing FD||6.20-6.70||12 to 120 months|
|Bajaj Finserv FD||6.10-6.60||12 to 60 months|
|Sundaram Finance Company FD||5.72-6.22||12 to 36 months|
How safe is corporate FD?
Bank FDs are considered a safe financial product as they follow strict RBI regulations. In the event of bank insolvency, whatever the amount of FD, up to one lakh rupees, it is protected under Deposit Insurance and Credit Guarantee Corporation. But there is no such protection on corporate fixed deposits. This does not mean that your investment is risky. However, before investing money in corporate FD of a company, you must check the credit rating of that company.
While taking a corporate FD, keep these things in mind
that the risks associated with high interest rate should also be taken into consideration. If you want to take the risk then you can choose Corporate FD. One should invest only in companies with higher credit rating. If companies with AAA or AA rating are making FD offers, then they can be invested. This will keep your money safe. Before investing in corporate FD, check the record of 10-20 years of that company. Invest in deposits of the same companies that are making profits.
Tax benefit is also available on corporate FD
Bank and company deposits are taxed according to the slab of income tax the investor comes in. Under the Income Tax Act 1961, if the interest on a bank FD exceeds Rs 10,000 in a year, then tax deduction (TDS) is made at the source. Its limit in company FD is Rs 5,000.