Corporate Fixed Deposits
A Corporate Fixed Deposits functions much like a bank FD but is issued by companies, non-banking financial institutions (NBFCs), and housing finance firms. Investors deposit a specific amount for a fixed tenure, and the company pays interest at regular intervals or at maturity. These deposits are unsecured, meaning they are not backed by collateral, and are governed by the rules set by the Ministry of Corporate Affairs and the Reserve Bank of India for registered issuers. Corporate FDs are often chosen by individuals seeking predictable returns while diversifying their fixed-income portfolio.
Fixed returns, defined tenure
About
Corporate Fixed Deposits are term deposit instruments offered by companies to raise funds from investors for a fixed period at a specified rate of interest.
- Predefined interest rates
- Fixed maturity period
- Interest payout options available
- Offered by corporates across sectors
Options
Corporate Fixed Deposits are available in different structures based on tenure and interest payout.
Cumulative Fixed Deposit
In this type, interest is compounded annually or quarterly and paid at the time of maturity along with the principal amount. It suits investors who prefer a lump-sum payout at the end of the term.
Non-Cumulative Fixed Deposit
Interest is paid out at regular intervals — monthly, quarterly, half-yearly, or annually — depending on the investor’s preference. It is ideal for those looking for regular income.
Short-Term Corporate FD
Offered for a shorter duration, generally ranging from 6 months to 2 years. It provides liquidity along with steady returns.
Long-Term Corporate FD
These deposits come with longer tenures, typically ranging from 3 to 5 years or more, and may offer slightly higher interest rates compared to short-term options.
Process
A simple process for participating in corporate fixed deposit offerings.
Fixed Interest Returns
Investors receive a predetermined rate of interest throughout the investment tenure, ensuring predictable income.
Flexible Tenure Options
Depositors can choose tenures based on their financial goals, typically between 6 months and 5 years.
Varied Interest Payout Options
Choose between cumulative (payout at maturity) or non-cumulative (periodic payout) options to suit individual preferences.
Higher Interest Rates
Corporate FDs often offer slightly higher interest rates compared to traditional bank deposits, depending on the issuing company’s credit rating.
Credit Ratings
Each FD is rated by agencies such as CRISIL, ICRA, or CARE, helping investors assess the credibility and repayment capacity of the company.
Premature Withdrawal Facility
Some issuers allow premature withdrawal after a certain period, subject to specific terms and penalties.
Overview
Fixed-income participation through corporate deposit offerings.
