Corporate Fixed Deposits are fixed deposits offered by corporate companies .They work like a regular Bank FD except Corporate FD’s offer a higher rate of interest compare to Bank FD’s ,they carry higher risk .The tenure period of a corporate fixed deposit ranges between 1-10 yrs.
Company Fixed Deposit is the amount deposited by investors for a fixed period of time with a company which offers a fixed rate of return. These deposits are accepted by manufacturing companies, financial institutions and non-banking finance companies, and are governed by Companies Act 58A.
Benefits of Company Fixed Deposits
- Higher interest rate: The rate of interest is 2-4 percent high, as compared to the interest rate offered by banks on fixed deposits.
- Regular income: Depending on the scheme, investors have the option to receive interest at monthly/quarterly/half-yearly/yearly intervals.
- Lock-in period: The minimum lock-in period for most of the schemes is six months, i.e. investors can withdraw their money post six months, anytime.
- TDS: TDS is not applicable if interest earned is equals to or less than 5,000 for a year in a single company.
Important things to consider
- Investors must carefully read the application form
- Check the rating of the company before investing
- Do a background check of the company before putting money into it
- Companies may change the interest rates on the fixed deposit schemes without any prior notice