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A Simple Guide On Corporate Fixed Deposit Rates In India

Updated on: 4 Dec 2024

Given the popularity of fixed deposits, many financial organisations have introduced their own corporate FDs. These include:

HFCs (Housing Finance Companies)
NBFCs (Non-Banking Financial Companies)

Their concept remains the same: you deposit your money for a certain term and get steady interest on your investment. While the plus point is that company FD rates may be higher than banks, the only fact to be cautious about is your exposure to risk. Read on to get clarity about investing money in such deposits.

Guide to Corporate FDs

Just like banks, registered NBFCs and HFCs also offer fixed deposits to get access to funds and offer secure returns. Like regular FDs, you invest a significant amount for a fixed period at an agreed interest rate. These FDs are not as secure as they are not insured up to ₹5 lakhs by the DICGC (Deposit Insurance and Credit Guarantee Corporation) unlike FDs offered by banks. They are, however, lucrative options as corporate FD rates are relatively higher, which is why they offer better returns.

Key Features of a Corporate or Company FD

When you opt for a corporate FD, you can get significant returns. However, it is best not to opt for the first issuer you come across. Instead, look for these features when searching for the best organisation for your term deposit:

Credit Rating

Corporate FDs come with a rating by recognised agencies like CRISIL, ICRA and CARE. These ratings show the credibility of the organisation. Thus, it’s best to choose the financial institution with the highest rating to reduce your risk and invest stress-free.

Interest Payment Options

Like banks, corporate FDs also have various interest payout options. You can sign up to receive your gains every month, quarter, year or twice a year. The rates you get differ based on the payout frequency you choose.

Premature Withdrawal

Most corporate FDs offer premature withdrawal after 3 months of tenure. However, this incurs penalties in terms of the interest rate applied to your deposit.

In conclusion, to pick the best company fixed deposit, you must assess these important features:

Credit rating
Corporate FD interest rate
Investment tenure
Premature withdrawal charges
Company reputation and track record

Also Read : Short Term FD vs Long Term FD

Latest Corporate FD Rates

Here are some top company fixed deposit interest rates that you can compare before proceeding:

Corporate FD	Maximum FD interest rate for Regular Citizens	Maximum FD interest rate for Senior Citizens	Credit Rating
ICICI Home Finance	7.95% p.a.	8.20% p.a.	CRISIL AAA/CRISIL PPMLD AAA/Stable
LIC Housing Finance Ltd.	7.25%	7.50	CRISIL AAA/Stable
Mahindra Finance	8.05%	8.30	CRISIL AAA/Stable
Muthoot Capital Services Limited	9.91	10.41	CRISIL A+/Stable
PNB Housing Finance Ltd.	8.85	9.15	CRISIL AA+/Stable
Shriram Finance	9.40	9.90	CRISIL AA+/Stable
Sundaram Home Finance	7.90	8.25	CRISIL AAA/Stable

Disclaimer: These rates are current as of November 2024 and are subject to change. Please check the latest rates before you invest.

Similarities and Differences Between Corporate FD and FD Offered By Banks

To make an informed decision, check out the differences between these two options and invest based on returns, safety of your capital and ease of premature withdrawal.

Parameters	Bank FD	Corporate FD
Potential Returns	Banks offer lower interest rates in comparison, which result in relatively lower returns	Corporate FD rates are relatively higher than bank FD rates, which offer higher returns
Risk Factor	These FDs are insured by the DICGC and are very safe	Corporate FDs have a relatively higher risk but you can check the FD rating before investing
Investment Tenure	Banks FDs may have a more extensive tenure, starting from 7 days to 10 years	Corporate FD tenures start from 6 months and can go up to 5 years in general
Premature Withdrawal	Your interest rate may be reduced by 0.5-2%	Your interest rate may incur a 2-3% penalty

While there are some differences, both types of FDs do share certain similarities, such as:

Capital Preservation and Guaranteed Returns

Both corporate and bank FDs keep your capital away from market forces and offer assured returns. This feature is the reason for the popularity of this investment option.

Higher Interest Rates for Senior Citizens

Both bank FDs and corporate FDs offer interest rate hikes to senior citizens. This helps those over 60 to have a reliable savings option with the ability to choose monthly payouts to finance life post retirement.

Flexibility of Investment Tenure

In both cases, you can choose how long you want to stay invested. This gives you the flexibility to choose the tenure as per your financial goal.

Now that you know how these deposits differ, you can choose the right one. To make the most of corporate FD rates, try staying invested for a longer tenure.