Corporate Fixed Deposits or Company Fixed Deposits are provided by Non-Banking Financial Companies or NBFCs as investment vehicles. When it comes to bank FDs, these corporate FDs bid higher interest rates. Bank FD rates are measured by a variety of parameters which may adjust the rate at which it lends to banks per the interest rate trend calculated by the Central Bank, the Reserve Bank of India via the Repo rate. However, with corporate fixed deposits, you can be assured of higher returns. Senior citizen depositors can also get special rates on company FDs with up to 0.5 percent. But bank deposits, though are better compared to corporate FDs, because the bank deposits also feature a Deposit Insurance and Credit Guarantee Corporation cover of Rs 5 lakh, which does not adhere to company FDs. So let's review and analyse India's best available company/corporate FD interest rates for investors in 2020.
|Top Corporate FDs||ROI||Tenure|
|Hawkins Cooker Ltd. FD||10.25% - 10.75%||12 to 36 months|
|Kerala Transport Development Finance Corporation FD||8.00% - 7.75%||1 - 5 years|
|Shriram Transport Finance FD||7.25% - 8.09%||12 - 60 months|
|Housing and Urban Development Corporation (HUDCO)||7.00% - 7.25%||12 to 60 months|
|PNB Housing FD||6.20% - 6.70%||12 to 120 months|
|Bajaj Finserv FD||6.10% - 6.60%||12 to 60 months|
|Sundaram Finance Company FD||5.72% - 6.22%||12 to 36 months|
|Mahindra Finance FD Scheme||5.70% - 6.45%||15 to 40 months|
|ICICI Home Finance FD||5.50% - 6.15%||12 to 120 months|
|LIC Housing Finance FD||5.65% - 5.75%||1 - 5 years|
|HDFC Ltd. FD||5.65% - 6.05%||12 to 84 months|
Note: The above-listed FD rates are applicable to investments below Rs. 2 crores that are liable to further modification and are also for cumulative option. Senior citizens and current account holders may be provided with higher rates.
Factors to consider while investing in corporate FDs
You may be attracted to financiers promising high-interest rates when investing in corporate FDs. Here are several parameters that you should consider while investing in company FDs:
- Always prefer a possibly the best and trustworthy company with a strong record of performance and sustainability.
- It is preferable to opt for a company with regular interest rates and no delay in reimbursing fixed deposits.
- Company or corporate fixed deposits are classified on a 14-point rating index by credit rating agencies such as CRISIL and ICRA, which analyse the estimated risk thresholds. These will reassure you from the periodic stabilisation factor of the company fixed deposits. The higher the ranking, the more stable your investment is.
- Always go for company fixed deposits that have FAAA ratings by CRISIL and MAAA by ICRA, which are the best in the sector.
Go for corporate FDs if you have short-term investment priorities but do not want to depart towards highly risky alternatives such as stocks or mutual funds. Corporates bid higher returns than the FD rates of standard banks. However, the DICGC (deposit insurance of up to Rs. 5 lakh only for bank FDs) does not prevent company FDs. But anyway you must verify the credit performance of the respective company to tackle it. Different credit rating agencies, such as CRISIL, ICRA and CARE, evaluate the credit performance of these non-banking financial companies (NBFCs). Check for an acceptable stable score by credit-rating firms before investing. You must reconsider before investing if it's less than acceptable.