Corporate Fixed Deposits

• Cumulative deposit: The interest gets accumulated and is paid upon maturity along with the principal. It is reinvested every year until maturity. This option gives you the benefit of compound interest for wealth creation.

• Non-cumulative deposit: You can opt for a monthly, quarterly, half -yearly or yearly interest pay-out in this scheme as chosen by the depositor. It will be convenient for pensioners or anyone who require a periodical interest payment.

• Credit Rating: Opt for higher-rated corporate FDs based on its credit rating which indicates the underlying risk of the company.

• Company Background: Assess a company’s business viability by referring to its Financial Statements, Management Discussion, and Analysis (MD & A).

• Repayment History: Companies’ repayment history helps to determine the company’s credit score, credibility, and stability.

• Risk profile: Make sure that the company you pick is financially healthy and helps you rule out any default risk during the fixed deposit period.

• Terms of FD: A cumulative scheme could be better than a regular income option as the interest earned gets invested in other avenues. At the end of the day, you’ll have a lump-sum amount in your hands. But not if you’re looking for a regular income from the FD.

Yes, senior citizens generally receive higher interest rates on corporate fixed deposits compared to regular investors. Many financial institutions offer this benefit as an incentive for senior citizens to invest.

• Yes. You can make a deposit in the name of minor provided such minor is represented by his natural or legal guardian and the application form for the deposit is signed by the natural/legal guardian, on behalf of the minor. All communication in relation to the deposit shall be addressed to the guardian.

Only the person(s) who have been appointed as guardian(s) by the competent court should sign the application. A copy of the court order has to be submitted to us.

• Yes. A copy of the Power Of Attorney is to be obtained and filled by the depositor.

To take out your corporate FD before maturity, you need to send a request to the company. After applying a small penalty on the interest, the company returns the remaining deposit amount to your account as per the terms.

• Yes, most banks and other financial institutions offer senior citizens higher rate of interest on their fixed deposit accounts. They are liable to get this benefit even if they open a fixed deposit account with a co-applicant who is not a senior citizen.

• TDS(Tax Deduction at Source) is not applicable to the interest earned up to Rs. 5,000 to 10,000 (depending on the financial institution). If the investor’s total income is lower than the taxable limit, they can furnish Form 15G/15H at the time of opening a FD account to avoid tax deduction.

• Yes. Keeping the unforeseen circumstances in mind, the banks and other financial institutions offer nomination facility to the depositor. If the depositor dies, the nominee can lay claim to the fixed deposit amount on maturity. This can, however, vary on the basis of the mode of holding.

Bank FDs are issued by different financial institutions while corporate FDs are issued by companies. Corporate FDs typically offer higher interest rates than traditional FDs.

Corporate FD interest rates differ across companies and depend on the deposit amount and tenure. Without the early withdrawal option, rates are often higher than regular FDs, but it’s best to check the latest figures before investing.

NRIs can invest in corporate FDs through their NRO accounts. The maximum deposit period allowed for NRIs is usually up to 3 years, based on company rules.

Corporate FDs with AA or AAA ratings from agencies like CRISIL or ICRA are considered safe. These ratings reflect the company’s good track record and ability to repay interest and principal on time.

Corporate FDs usually come with a minimum lock-in period of three months. After that, you can withdraw the deposit if needed, but a small interest penalty may apply based on how long the funds were held.