Corporate
Fixed Deposit
Interest Rates: For individuals seeking higher fixed deposit interest rates than those offered by banks, investing in corporate FDs can be a viable option.
Corporate fixed deposits
, also known as corporate FDs, are term deposits with fixed interest rates held for a predetermined period, primarily issued by Non-Banking Financial Corporations (NBFCs) and Housing Finance Companies (HFCs).
According to the
SBI
securities website quoted by ET, “The deposit scheme of companies is ‘AA/AAA’ rated from independent rating agencies like CRISIL, ICRA & CARE (reaffirmed over the long period) which indicates credible track record & high to highest degree of safety when it comes to timely repayment of Interest and Principal investment amount.”
This suggests that investing in corporate FDs can be considered safe, as long as the issuing companies have high credit ratings from reputable agencies.
Company Fixed Deposit Interest Rates
| Company Fixed Deposit Rates | |||||||
| Company Name | Credit Rating | Interest Rates (p.a.) | Additional interest rate for senior citizen | ||||
| Highest Rate Slab | Applicable tenure | 1-year tenure | 3-year tenure | 5-year tenure | |||
| Shriram Finance* | ICRA – AA+/Stable IND AA+/Stable by India Ratings and Research | 8.47 | 50 months and 5 years | 7.59% | 8.38% | 8.47% | 0.50% |
| Mahindra Finance | CRISIL – AAA/Stable India Ratings – IND AAA/Stable | 8.1 | 3 years and 5 years | 7.50% | 8.10% | 8.10% | 0.25% |
| Manipal Housing Finance Syndicate Ltd. | ACUITE – ACUITE A | 8.25 | 1 year, 2 years and 3 years | 8.25% | 8.25% | 7.75% | 0.25% |
| PNB Housing Finance Ltd. | CRISIL – AA/Positive CARE – AA+/Stable | 7.85 | 36-47 months | 7.45% | 7.85% | 7.65% | 0.20%-0.30% |
| Sundaram Home Finance | CRISIL – AAA/Stable ICRA – AAA/Stable | 7.9 | 4 years and 5 years | 7.45% | 7.75% | 7.90% | 0.35%-0.50% |
| Muthoot Capital Services Limited | CRISIL – A+/Stable | 8.38 | 5 years | 7.21% | 8.07% | 8.38% | 0.50% |
| ICICI Home Finance | CRISIL – AAA/Stable ICRA – AAA/Stable CARE – AAA/Stable | 7.65 | 3 to less than 5 years | 7.25% | 7.65% | 7.60% | 0.25% |
| Can Fin Homes Ltd. | ICRA – AAA/Stable | 7.5 | 3 years | 6.50% | 7.50% | 6.75% | 0.25%-0.50% |
| Bajaj Finance Limited | CRISIL – AAA/Stable ICRA – AAA/Stable | 8.6 | 42 months | 7.40% | 8.10% | 8.10% | 0.25% |
| LIC Housing Finance Ltd. | CRISIL – AAA/Stable | 7.75 | 3 years and 5 years | 7.25% | 7.75% | 7.75% | 0.25% |
| *At Monthly Rests. Additional interest of 0.25% p.a on all renewals, where the deposit is matured. Additional interest of 0.10% p.a. for women depositors. | |||||||
| Data as on 15th May 2024 | |||||||
It is important to note that the returns on corporate FDs are taxable. The interest earned from corporate FDs is taxed according to the individual’s marginal tax slab rate. Additionally, a 10% TDS (Tax Deducted at Source) is deducted from the interest payable if the total interest earned by an individual is equal to or more than Rs. 5,000 in a financial year, the ET report says.
However, resident individuals can avail exemption from TDS by submitting form 15G / 15H (as applicable), although this declaration must be submitted every financial year until maturity.
When choosing a
corporate FD
scheme to invest in, consider the following factors:
1. Credit Rating: Select higher-rated corporate FDs based on their
credit rating
, which indicates the underlying risk of the company.
2. Company Background: Evaluate a company’s business viability by referring to its Financial Statements and Management Discussion and Analysis (MD & A).
3. Repayment History: A company’s repayment history helps determine its credit score, credibility, and stability.
