Best Corporate FD Scheme in India

What is a Corporate FD?

The Corporate FD or Company Deposits are an investment instrument offered by housing finance companies and a diverse set of NBFCs. The Corporate FD provides interest to the depositors at a predetermined rate and a flexible tenure. The company FDs are a popular investment avenue as the interest rate is higher than that of the bank FDs.

The investors select the corporate FDs to park their savings as it provides concrete returns to them in times of uncertainty. Investors can choose and earn regular income by opting for the pay-out option or accumulate capital through the cumulative option at their discretion.

Interested investors can choose from the diverse assortment of Company FDs available in the market. They can research and select the corporate FD whose tenure, interest rate, and terms and conditions complement the investment objectives of the depositor. The depositor stands to earn from the stable returns without volatility. The investor can choose from the various corporate FDs rated AA or AAA.

Features of a Corporate FD

The Corporate FD is a financial product that attracts a variety of investors as they entail the following features:

• Financial institutions and companies offer the Corporate FD or Company FD to the investors to park their savings.
• The functionality of the company FD mirrors the Bank FD. However, the interest rates offered to the depositors are higher. Some institutions provide interest rates up to 7.2% to investors.
• The investment instrument is a low-risk avenue as the amount invested is not subject to volatility in the market.

• Some corporate FDs offer a flexible tenure to investors. The tenure of investment is short-term and ranges from 1 to 5 years.

• Some Institutions allow the depositors the provision to liquidate their investments without any hassle.
• The depositors avail of the provision to make premature withdrawals if the institution allows it.
• The interest earned on this saving and investment instrument can be utilised to obtain an asset.
• The depositor can select either cumulative or non-cumulative payout options at their discretion.
• The depositor can also refer to the safety rating prescribed by the credit agencies like ICRA and CRISIL while browsing for corporate FDs available in the market.

What are the benefits of investing in a Corporate FD?

The investor who parks their savings in this investment vehicle can avail of the following benefits:

• The depositor stands to earn interest up to 7.2% on their deposits in a Corporate FD.
• The returns on the investment are assured.
• The tenure of the investment is flexible, and some institutions also offer provisions for premature withdrawal.
• The depositor can conveniently liquidate their invested amount in the corporate FD.

Reasons to Invest in Corporate FD

The Corporate FD is a safe avenue for depositors as it offers assured investment returns. Investors often gravitate toward this investment instrument for the following reasons:

Assured Returns

The depositors receive fixed returns on their investments. The investment in the Corporate FD is immune to any volatility in the market.

Higher Interest Rates

The interest rates are also higher than those offered by the bank FDs. The interest rate on the corporate FD offered concerning the tenure of the investment made.

Maturity Amount

The investor will also know the amount they can receive at maturity.

Flexible Tenure

The investor can also avail of flexibility in terms of the tenure of the investment. Some institutions also provide the provision for premature withdrawal.

Lower-Risk

The risk factor is minimal as the institutions that offer corporate FDs to the investors must meticulously follow the guidelines and regulations determined by the RBI/Ministry of Corporate Affairs.

Additional Interest Rate

The Corporate FD offers 0.25% additional interest on senior citizens.

Documents Required to Invest in a Corporate FD

The investors inclined to park their savings in the Corporate FD are required to maintain the following documents to establish an account:

• Voter ID Card
• Ration Card
• Aadhaar Card
• Passport
• PAN Card
• Address proof authenticated by the Government
• Passport sized-photographs

Points to Remember while Selecting Company FD

The investor who is invested in allocating their savings with a company FD should take into account the following factors:

Interest Rate Offered

The interest rate is one of the most crucial parameters the investor should account for. A higher interest rate would augment the maturity amount. Various institutions’ interest rates are competitive and additional interest is provided to the senior citizens.

Financial Institution Credibility

The investors shall meticulously assess the safety ratings of the institutions. The credit agencies grant ratings to these institutions. Generally, an AA+ rating by the ICRA or “IND AA+/Stable” rating from India Ratings and Research reflects the high-credit quality.

Cumulative or Non-Cumulative FDs

The investor should also decide whether they want to avail of a cumulative or non-cumulative FD option. The investor can opt for a non-cumulative option where they stand to earn regular income from interest monthly, quarterly or yearly. They can also stimulate their capital by choosing the cumulative option, where they will receive the accumulated principal and interest at maturity.

Penalty

Another factor to consider is the penalty the depositor would have to bear if they make a premature withdrawal. There are instances where the depositor might need the amount for emergencies. It is advised that the investor shall thoroughly assess the penalty charges to be levied. The penalty charges for a premature withdrawal vary from institution to institution. An investor should consider the terms and conditions before choosing a corporate FD.

Hassle-Free Application Process

The investor should also be aware of the application processes of the corporate FDs before opening an account, as the procedure varies from institution to institution. Some institutions provide a hassle-free online application process to their users to conveniently establish their Company Fixed deposit from the comfort of their homes.

Eligibility to Open a Corporate FD

Along with the documents mentioned above, the applicant shall also meet the eligibility criteria to open a Corporate FD account.

• To qualify for a corporate FD, the applicant must maintain a minimum balance on their respective bank account.
• The applicant shall possess Indian citizenship with a residence in India. However, Non-resident External (NRE) and Non-resident Ordinary (NRO) can also apply to this lucrative investment instrument.
• The applicant is required to submit an Identity proof and an address proof.

Identity Proof: Documents such as Aadhaar Card, PAN card, passport, and Voter ID Card can be submitted.

Address Proof: The applicant can submit documents like telephone and electricity bills and bank statement, which features the address.

Procedure to Break a Corporate FD

There are instances and emergencies where an investor might be required to break their company’s fixed deposits. The decision may be driven out by an emergency or a better investment opportunity. Generally, the institutions levy penalties for premature withdrawal concerning the tenure on which the withdrawal was made.

The financial institutions offering corporate FDs to investors have already established steps for such occurrences. The depositor can follow the mentioned steps to withdraw the amount prematurely from their Corporate FD.

Online Withdrawal

Some NBFCs provide the provision to their depositors to break their FDs online. Generally, the depositor inclined to withdraw their amount follows the following steps.

STEP 1: The depositor must visit the institution’s official website where they have made the deposits.

STEP 2: The depositor must mention essential credentials such as the User login ID and Passwords.

STEP 3: Navigate to the service request section present in the dashboard.

STEP 4: Select the tab where ‘Premature Closure of FD’ is mentioned.

STEP 5: FD number of the depositor shall be entered along with the required fields.

STEP 6: To conclude the process, the cancellation request for company FD shall be submitted.

Offline Withdrawal

The depositors can also avail of an offline withdrawal procedure in emergencies. The charges of breaking an FD are similar irrespective of the method. The depositor can refer to the following steps to break an FD offline.

STEP 1: The depositor would be required to visit the nearest branch office and diligently fill out a form concerning the premature withdrawal of FD. The depositor shall accurately mention details such as FD, name, and bank account number.

STEP 2: The premature withdrawal form shall be submitted along with ID proofs such as a PAN Card photocopy.

STEP 3: After submitting the form successfully, the bank will assess the application request for premature withdrawal.

STEP 4: After the assessment, the bank will initiate the process to transfer the invested amount in the FD to the respective bank account of the depositor.