CORPORATE FIXED DEPOSITS

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About Company Fixed Deposits

Company Fixed Deposits (CFDs) are Term Deposits offered by companies like housing finance ventures. They usually offer a higher interest rate as compared to banks and Non-Banking Financial Companies (NBFCs). This variant of Term Deposits is regulated by Section 58 A of the Companies Act, 2013.These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.

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How to Choose the Best Company Fixed Deposits

Background of the company: Check the company's history and background before deciding to avail a fixed deposit scheme. You must also check the customer reviews as well.
Repayment history: You must check the company's repayment history and the frequency at which they pay their customers.
Credit rating: Ensure that the company's credit rating is high before deciding to avail a fixed deposit scheme.

Benefits of Company Fixed Deposits

Flexible tenures: Various companies offer FD schemes with tenures ranging between one year and ten years. You can choose a tenure as per your requirements.
Higher interest rates: Companies offer competitive interest rates on the deposit amounts.
Assured returns: Investing in Company FD schemes is significantly safe and less risky due to high interest rates and credit ratings. The returns are assured.

Company FD Rates Key Highlights

Minimum deposit amount of Rs.25,000.
Additional 0.25% to 0.50% interest for senior citizens.
Tenure between one year to Ten years.
Frequency of interest payout: Monthly/Quarterly/Half-yearly/Yearly
In an unfavorable market climate, the company might get defaulted.
Before investing in a CFD, you can assess the risks involved through CRISIL, ICRA or CARE ratings.
Penalties on premature withdrawal is usually higher as opposed to bank FDs.
If the interest income exceeds Rs.5,000, it will be treated under Tax Deducted at Source (TDS).

What do the ratings by CRISIL, ICRA and CARE mean?

Credit Rating Information Services of India Limited (CRISIL), Investment Information and Credit Rating Agency of India Limited (ICRA) and Cooperative for Assistance and Relief Everywhere (CARE) are globally-recognized rating agencies. These help you assess the credibility of a firm or institution before making an investment or applying for a loan.

Rating	Description
CRISIL AAA (Highest Safety)	Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.
CRISIL AA (High Safety)	Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk
CRISIL A (Adequate Safety)	.Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk
CRISIL BBB (Moderate Safety)	Instruments with this rating are considered to have moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.
CRISIL BB (Moderate Risk)	Instruments with this rating are considered to have moderate risk of default regarding timely servicing of financial obligations.
CRISIL B (High Risk)	Instruments with this rating are considered to have high risk of default regarding timely servicing of financial obligations.
CRISIL C (Very High Risk)	Instruments with this rating are considered to have very high risk of default regarding timely servicing of financial obligations
CRISIL D Default	Instruments with this rating are in default or are expected to be in default soon.

Who is eligible to apply for a CFD?

Individuals
Residents of India
Members of Hindu Undivided Family (HUF)
Group enterprises
Partnership companies
Corporates
Clubs
Educational institutions
Cooperatives
Societies
Associations

What are the documents needed for KYC by individuals to open a CFD?

Government-validated ID & address Proof (any 1)
Passport
Driver's license
Voter ID Card
Aadhaar Card
Permanent Account Number (PAN)
Two color passport-size photographs

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Disclaimer: * Interest Rates ( mentioned as on Nov’2022 ) are subject to revision by the respective Companies / Government from time to time. I am acting as a referral agent to these companies and the offer is brought to you by the companies subject to fulfillment of eligibility criteria, terms and conditions etc. Investors are advised to read the Terms and Conditions offered by respective companies carefully before taking any investment decision.