What is an investment if you do not get good returns? If you are in 2022 and still earning very low returns, it is about time to switch your investment options to corporate fixed deposits because it offers the highest interest rate in India. Unlike fixed deposits from banks, corporate fixed deposits from highly-rated NBFCs (Non-Banking Financial Companies) offer the highest safety, guaranteed returns at high-interest rates and growth at zero risk.
Corporate FDs are better than standard FDs from banks because NBFCs offer higher interest rates. When investing in a corporate FD, you should choose the NBFC with the highest interest rate. But, it is also necessary to check the credibility of the NBFC and make sure they are rated high for safety and repayment of maturity.
What is a Corporate Fixed Deposit?
A corporate fixed deposit is offered by NBFCs for investors to maximise their investment at a fixed tenure. Corporate fixed deposits have the same guidelines as bank’s standard fixed deposits, but NBFCs that offer corporate FDs are recognised by agencies like CRISIL, CARE, ICRA, etc., and banks are managed by RBI.
Features of Corporate Fixed Deposits
NBFCs possess a few features that differentiate corporate fixed deposits from standard fixed deposits offered by banks. Read further to understand the features and plan your investments accordingly;
- The income earned from the interests of corporate fixed deposits is taxable.
- NBFC allows you to choose the interest pay-out based on your financial needs. You can choose from monthly, quarterly, half-yearly and annual pay-out options.
- You can make premature withdrawals on your corporate fixed deposit with a penalty (lowered interest rate)
- NBFCs help you to double your investment by availing cumulative FDs. These FDs use compounding interest calculation on your FD investment.
- NBFCs allow you to get loans against your fixed deposit. This feature will enable you to get considerable cash in case of emergencies without breaking your FD.
Benefits of Corporate FDs
Corporate FDs offer great benefits for investors focused on growing their money quickly. Check out a few advantages that make corporate fixed deposits the most popular investment option in India.
- A corporate fixed deposit provides higher interest rates than a standard fixed deposit from banks. For example, Shriram Fixed Deposit offers up to 8.40%, the highest interest rate in India.
- Agencies like CRISIL and ICRA rate NBFCs. Therefore, your fixed deposit is safe, and you are assured of getting guaranteed returns.
- You can pick any number of years for your corporate fixed deposit. The tenure can be between 7 days – 5 years.
- You can choose to get your interest pay-out on a regular interval (monthly, quarterly, half-yearly and annually) in a corporate fixed deposit.
- NBFCs allow you to withdraw cash anytime during your corporate fixed deposit tenure. However, the companies charge a small penalty toward your fixed deposit.
- NBFCs with a good rating like FAAA/Stable are the safest for fixed deposit investment.
Interest Rates of a Corporate Fixed Deposit
By now, you would have figured out that a corporate fixed deposit yields good returns than a standard fixed deposit from banks due to the difference in the far-reaching interest rates.
Senior citizens in the corporate fixed deposit get the privilege to earn a bit extra than other investors. In addition, the senior citizen FD interest percentage varies depending on the companies. If you are choosing an NBFC for your fixed deposit based on the interest rates, you have to be aware of the companies that offer extraordinary interest rates than the standard market rate. Because those companies might not have a good credit rating and will default at maturity.
Therefore, you need to assess the finance company’s credit quality and safety ratings before investing in a corporate fixed deposit.
Are you Eligible for Corporate Fixed Deposits?
Anyone is eligible to avail of a corporate fixed deposit. But, you need a few government documents to complete your KYC with an NBFC before starting a corporate fixed deposit investment. Below are a few factors you must consider before applying for a corporate fixed deposit.
It is Time to Decide and Invest
Understanding the interest rates available in the market is the biggest challenge. However, with this blog, you have now understood what a corporate fixed deposit is, its features, benefits and the highest interest rate they offer investors.
So make a quick choice and start with Shriram Fixed Deposit (the FD scheme offering India’s highest interest rate).