Company FDs are prominent, even at a significantly higher risk, among investors who want fixed higher returns than what bank FDs offer. That being said, much like FDs, based on your income tax slab, interest on corporate FDs is completely taxable. Considering the risk involved, corporate FDs are not suggested to the average investors. However, if you want to invest in them, you have to minimise the risk by picking high-rated corporate or company FDs. The AA rating suggests that the extent of safety with respect to regular payments is good; the higher the rating, the stronger the issuer's risk capacity. Even, make sure that the premature withdrawal conditions are not very stringent. Here's a collection of AA-rated or above corporate FDs that give higher returns.
|Sr. No.||Company Fds||ROI in %||Tenure in months||Rating|
|1||Hawkins Cookers||9||12-36||MAA/Stable by ICRA|
|2||Shriram City Union Finance||8.09||12-60||MAA+/Stable by ICRA|
|3||Shriram Transport Finance||8.09||12-60||FAAA/Negative by CRISIL; MAA+/Stable by ICRA|
|4||HUDCO*||7.3||12-60||MAAA/Stable by ICRA; AAA by CARE|
|5||PNB Housing Finance||6.5||12-120||FAA+/Negative by CRISIL; AA Stable by CARE|
|6||Bajaj Finance||6.41||12-60||FAAA/Stable by CRISIL; MAAA/Stable by ICRA|
|7||Sundaram Home Finance||6.22||12-36||FAAA/Stable by CRISIL|
|8||Sundaram Finance||6.22||36-60||FAAA/Stable by CRISIL; MAAA/Stable by ICRA|
|9||HDFC||6.05||33-66||FAAA/Stable by CRISIL; MAAA/Stable by ICRA|
|10||Mahindra Finance||5.9||12-60||FAAA/Stable by CRISIL|
|11||ICICI Home Finance||5.9||12-120||FAAA/Stable by CRISIL; MAAA/Stable by ICRA; AAA by CARE|
|12||LIC Housing Finance||5.6||12-60||FAAA/Stable by CRISIL|
Corporates provide higher returns on FDs if compared to the interest rates offered by average banks. However, the DICGC does not cover deposit insurance of up to Rs. 5 lakh on corporate FDs as compared to bank FDs. This is now a topic of attention. Anyway you must verify the credit performance of the respective company to fix it. Different credit rating firms, such as CRISIL, ICRA and CARE, ascertain the credit performance of these non-banking financial companies (NBFCs). Check for an overall 'Stable' score from credit-rating firms before investing. Go for corporate FDs if you have short-term investment priorities but do not want to diverge from riskier alternatives such as stocks or mutual funds.