What are Corporate or Company FDs? Do they give better Rate of Interest than Bank FDs? Read to know more #MOneyMantraWithJhilmil #Financialawareness #FinanceBlogger #Investment #Investingtips #investmenttips #financialawareness
Money Mantra

What are Corporate FDs?

Corporate FDs

Fixed Deposits are the most common form of Investment and most of our idle money is in the form of FDs with banks. Fixed deposits earn higher interest rates as compared to a regular savings account. In this time of the pandemic, when the interest rates on FDs have been lowering, as an investor, we have been looking for other instruments with better returns. But at times better returns come with a certain amount of increase in risk exposure. One such instrument which works very similarly to the Bank Fixed Deposit (FD) is Corporate Fixed Deposits or Company Fixed Deposits.

What is Corporate / Company Fixed Deposits?

Corporate Fixed Deposits are a kind of Fixed deposits, an alternate instrument for saving and investing. Usually offered by NBFCs, Company Fixed deposits are not every corporate/ company.

The major functioning of Corporate Fixed Deposits is mostly the same as Bank FDs, with the difference:

Comparision between Corporate(or Company) FDs vs Bank FDs, which yield more rate of Interest?

Examples of Corporate Fixed Deposits:

To invest in Corporate FDs, you need to avail the application form / apply online via the company’s official website or through your stockbroker. A few examples of Top Corporate FD rates and tenure are :

Company Name

ROI (as per the company website

on 15th August )

Tenure

ICICI Home Finance FD

6.00% – 6.35%

12 months – 120 months

Shriram Transport Finance FD

7.25% – 8.09%

12 months – 60 months

HUDCO FD

7.00% – 7.25%

12 months – 60 months

PNB Housing FD

6.65% – 7.00%

12 months – 120 months

Sundaram Finance Company FD

6.71% – 7.00%

12 months – 36 months

 

Corporate FD

Bank Fixed Deposit /Term Deposit

Issuer

Annual Rate of interest

Issuer

Annual Rate of interest 

ICICI Home Finance FD

6.00% – 6.35%

ICICI Bank

2.5 – 5.35%

Shriram Transport Finance FD

7.25% – 8.09%

State Bank of India

2.90-5.50%

HUDCO FD

7.00% – 7.25%

Axis Bank

2.5 -5.50%

PNB Housing FD

6.65% – 7.00%

HDFC Bank

2.5 -5.50%

Sundaram Finance Company FD

6.71% – 7.00%

Punjab National Bank

3 – 5.30%

*These rates are as on 21st August

Should one invest in Corporate FDs?

Due to the Indian and global economic slowdown in the COVID era, the rate of interest has gone down even in Corporate FDs. But if you have a short-term goal of a year to 3 years, and do not want to invest in stocks, equity-linked mutual funds, then the best option is to opt for Company / Corporate FDs.

Checks that need to be in place before investing in Company Fixed Deposits:

Though corporate FDs provide better interest rates, it is very important to analyze the fundamentals of the company you are planning to invest in. Hence, understanding the company’s credit health (more so during this time) has become imperative.

Every company’s credit health and rating have been defined by the credit rating agencies (CRISIL, ICRA, CARE). An investor needs to check the recent credit ratings and also understand the current market situation of that company.

Hence, as an investor, a risk assessment should be done on the company’s health before investing your hard-earned money.The risk lies only when the company goes bankrupt / faces liquidity crunch and may delay the payment of the principal/interest amount to the investors.

DHFL and IL&FS are classic examples of such a scenario and you can gain more insights by reading their case study.

Corporate Fixed deposit vs Corporate bonds:

Don’t get confused between both these terms, as both these investment avenues are different in terms of their yields and risky proposition. Also, bonds are listed and can be traded on the exchanges, but the Rate of Interest / Coupon rate may change based on the change in GOI bond rates.

Check out more posts under #MoneyMantraWithJhilmil here / Connect with me on Instagram

Disclaimer:

These are solely the opinions of the author. Though the information is well researched and true to the best of author’s knowledge, it cannot be a substitute for professional advice. This post does not guarantee or promises regarding the accuracy, reliability, or completeness of the information presented. The information presented is only for informational purposes and shouldn’t be seen as any kind of advice. Always refer to your Financial Advisor for financial advice.

Happy Investing!

#MoneyMantrawithJhilmil

Jhilmil

Quest to live the life surrounded with the charming little bundle's of joy. When they speak, I sing, When they smile, I rejoice , When they hug, I hold them never to lose, Such is my passion for these Gifts of God.

This love urged me to navigate separately from my Travel Blog & establish an "All-In-One" Blog for budding mothers. Mum's have multi-tasked this world ,with all her professional commitments , she still makes an extra effort to be a loving, caring and be an intellectual mommy! Cheers, for me too come from the same fraternity, post having a superb academics & close to 8 years of professional experience and blessed with a little one "who has indeed changed my life from Autumn to Spring";)

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20 Comments

  1. Thanks a lot for educating me on this topic. Having knowledge of financial terms is very important.

  2. Ruchi Verma says:

    Wow!! This is quite informative and new for me ..I am following your series on Instagram too but reading about this is something very new to me!!

  3. Rashmi Chand says:

    woww.. i didnt know something like corporate FDs even existed. thanks for this detailed post giving us a short term investment alternative to regular BAk FDs

  4. I have zero knowledge on investments and how to go about it as it is all handled by my husband. But reading your post increased my curiosity to k ow more.

  5. Mayura Amarkant says:

    Amazing piece! I loved reading this insightful post. You have broken down Corporate FDs and Bank FDs in a very simple manner. Thank you!

  6. Surbhi Prapanna says:

    Finance is something that has various terms that most of us did not understand. your series is looking really great on this aspect. this post was super informative and you had explained different aspects of corporate fds so well in this post.

  7. Neha Sharma says:

    Your money mantra posts are really informative and helpful for people like me who know nothing about finance. I had no idea that we also have an option of corporate FDs where we can get higher rate of interest.

  8. Smitha N says:

    I am seriously zero about all this in financial topic but after reading ur post I am really getting bit intrest… Nice write up…

  9. Rajshree Sawant says:

    I do not have much knowledge when it comes to investment but after reading your post my interest has piqued on this subject.

  10. Mandavi Jaiswal says:

    Really informative and useful post I must say. You answered so many of my questions. The interest rates looki really exciting

  11. Ujjwal Mishra says:

    This is new for me. Corporate FD’s is something i have never heard of. Will share your post with friends of family. its good to know.

  12. Varsh says:

    FD interest rates have dropped a lot overall. But since these Corporate FDs have a lesser lock-in period they seem like a risk free way to get returns.

  13. Swati Mathur says:

    I can never understand finance but you explained it in such a simple way. Not aware about all this thanks for sharing.

  14. Really informative series Jhilmil, I get to learn something new every time I read its posts. Keep them coming.

  15. Cindy Dsilva says:

    Thanks for the detailed information. . I always wondered what were the differences and other options for FDs. Will look into these once again.

  16. Gunjan Upadhyay says:

    This is really insightful series Jhilmil, I had some vague idea of corporate Fds but never knew we could invest as an individual too in corporate Fds

  17. Tina Basu says:

    I didn’t know about this. This is totally new for me. Thanks for sharing this information. Normal FD interest rates have become so pathetic, we are looking for somewhere better to invest.

  18. Dr Bushra says:

    That’s very insightful post about corporate FDs. As investment is dicey now a days, incase of short term investment this sounds a good option

  19. Snehalata says:

    Thanks for this inside full post about corporate FD , I was not aware of this thing but your post has really give me a lot of investment insights

  20. Deepika says:

    I am listening to the very first time to this Corporate FDs. Thank you so much for giving me some insights about this topic.

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