Corporate Deposit

Corporate Deposit Service By WinRich Professional Services Pvt Ltd

Corporate deposits or company fixed deposits are term deposits wherein you put your money for a fixed tenure at a fixed rate of interest. They are offered by non-banking financial companies (NBFCs) and other financial institutions. Compared to a regular bank fixed deposit, they fetch a higher rate of interest. The maturities of company FDs range from a few months to a few years.

Who Should Invest?

If you have a short-term financial goal such as saving for an international trip or buying a gift for your spouse, corporate fixed deposits can be a good investment option.

However, corporate FDs are not covered by the DICGC (deposit insurance of up to 5 lakh which is only available for Bank FDs). To overcome this concern, ensure you check the basic fundamentals of the company are strong and the company enjoys a good credit rating. If the credit rating by credible agencies is below average you must reconsider putting your money in that particular company and look for other reliable companies. It is ideal to invest in a high-rated corporate deposit with AAA or equivalent rating. It signifies the highest safety regarding the payment of interest and the principal. As you go lower in the rating chart, the degree of safety reduces.

What does Corporate Deposite Covers?

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Benefits of the Company/Corporate Fixed Deposits

Now, let us look at the main advantages of investing in the best corporate FDs:

Flexibility of tenure:

Similar to Bank FDs, Corporate FDs also offer the flexibility of tenure ranging from 12 to 60 months for which you can remain invested. So, if you are saving for a short-term goal, you can invest for one year. If you are looking to build a decent corpus, you can invest for five years.

Assured returns:

As we learnt earlier, the best company FDs enjoy higher ratings from notable credit rating agencies. Most companies offering corporate deposits are certified with CRISIL’s FAAA/Stable rating and ICRA’s MAAA/Stable rating. These are considered as some of the highest safety ratings offered in the industry in terms of timely payment of principal and interest. A company with a high credit rating is likely to guarantee assured returns on your investment regardless of the market fluctuations.

Higher interest rates:

Compared to Bank FD rates, corporate FD rates are higher. Over and above these interest rates, senior citizens can avail of an additional benefit of 0.25%. So, if an individual invests with Bajaj Finserv for less than 2 years, he will earn an interest rate of, say, 6.10%. For a senior citizen, the interest rate would be 6.35%.

This fixed income can come in handy for senior citizens who rely on fixed deposit returns post-retirement for meeting their living expenses.

Asset Allocation

Asset allocation stabilities your risk and reward by allocating your assets

One place to hold your investments

Financial instrument that holds some type of monetary value

Getting the shares of a private corporation to the public in a new stock issuance

Why You Should Invest

Corporate fixed deposits fare better than Bank FDs as they offer a significantly higher interest rate. The interest rate difference between regular Bank FDs and corporate fixed deposits is generally in the range of 1% to 3%. This seemingly small difference can have a sizable impact on your corpus in the long run. Moreover, company fixed deposits mostly have lower lock-ins and are a bit more flexible in how the interest gets paid.

Similar to Bank FDs, a corporate fixed deposit can also be used to avail loan facility when you require the funds in case of an emergency. The sanctioned amount can vary from one financial institution to the other. Usually, it can go as high as 75% of the fixed deposit amount.

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KARUNA COMPLEX with unit no. G4 , Ground floor, 337/3, Sampige Road, Malleswaram, Bangalore 560003

Corporate Deposit