Corporate Fixed Deposits: 7 Must Know Points

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Corporate fixed deposits are very similar to bank fixed deposits where the money is invested in corporate and not with a bank.

Financial Institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. There are two types of fixed deposit schemes one is cumulative and other is non-cumulative fixed deposit schemes.

Also read: 5 Things To Check Before Investing In A Company Fixed Deposit

Here are 7 must know points if you are planning to opt for corporate fixed deposits.

Risk Involved

1. Corporate fixed deposits are riskier than bank fixed deposits and it is not backed by any Insurance act. Your money in a bank fixed deposit is guaranteed by the Deposit Insurance and Credit Guarantee Corporation up to an amount of Rs 1 Lakh in the bank.

Interest rates

Interest rates offered by corporate fixed deposits are generally higher than those offered by banks.

Interest payment frequency

Interest is paid on monthly, quarterly, half yearly, yearly basis or on maturity depending on the mode of selection.

Premature withdrawal

Individuals can make a premature withdrawal from a corporate fixed deposit. However, there are some charges that are associated with it.

No interest on early withdrawal

Any withdrawal from a Company fixed deposit within six months the company will pay no interest.

Credit Rating

If the corporate fixed deposit has a good rating, it is perceived that the company will be able to honour its obligation on timely payment of interest and principle amount.

Story first published: Thursday, September 3, 2015, 12:11 [IST]
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