Fixed deposits are one of the favourite saving options for Indians, owing to safety and flexibility in choosing tenures. Some people select bank FDs, while others prefer to park their money in company fixed deposits (FDs). Though there is not much difference between the two, the company FDs fetch a better interest rate.
Company FDs are term deposits. You put your money into these FDs for a fixed tenure to earn a fixed interest rate. The tenure of company FDs may range from a few months to a few years. Depending on your requirements and financial goals, you can deposit your money and earn interest as per your agreement with the lender.
For those looking to meet their short-term financial goals, such as a foreign trip, buying an expensive electronic gadget or a gift for your family or friends, corporate FDs can be a good option for earning a higher interest rate. Though the difference between corporate FDs and bank FDs may look small, it may give you a sizeable corpus if you consider long-term FDs. One of the attractive features of corporate FDs is shorter lock-ins. You can choose the term as per your requirements.
Like bank FDs, corporate FDs also offer you an option to take a loan when you need the money in case of an emergency. However, the amount and eligibility for such a loan facility may vary from company to company. Typically, you can take a loan between 70% and 80% of your fixed deposit. But it is good to get clarity on the same before you park your money.
If you are considering putting your money in company FDs, the rule of thumb is to check and compare the interest rates of different companies. Besides, it is good to perform some due diligence on the companies’ backgrounds and the terms and conditions of their FDs. Always opt for companies with a good track record of payment and interest rates to customers.
You must also check the credit ratings of the company FDs and put your money in only those companies that carry AAA, AA and AA+ ratings from agencies like Crisil, ICRA, CARE, etc.
Top-rated company FDs are considered safe, and they are also likely to give you higher rates of interest. Company FDs are taxable as per the investor’s income slab. So, keep this in mind before signing an agreement with the lender.
Here is a list of the top 10 company FD rates and their ratings to help you decide. You can compare the interest rates and tenures and go for those that attract you or suit your requirements the best.
Company FD Rates and Ratings
Data as on 05 April 2022. All issuers give an additional 0.25% interest rate to senior citizens, except for Shriram City Union and Shriram transport that give .40%, whereas Sundaram Home Finance and Sundaram Finance that give 0.50%. Data shows highest interest rate for cumulative fixed deposit below Rs 1 crore in the corresponding tenure range. Data taken from respective company’s website.
Compiled by BankBazaar.com