A fixed deposit (FD) is a classic low-risk savings instrument for countless Indians and most of us know how to purchase one.
However, FDs are not only offered by banks but also by other financial entities, such as NBFCs or Non-Banking Financial Institutions and other corporations. The primary benefit of opting for a corporate or company FD is that they fetch a relatively higher interest rate than bank fixed deposits.
How to Choose the Right Corporate FD?
Sure, you want to choose a corporate fixed deposit that offers the highest rate of return, but this should not be your sole criterion for selection. Before zeroing in on a corporate FD, ask yourself the following three questions:
Who is Issuing the FD?
Carefully vet the background of the company or corporation whose FD you plan to invest your hard-earned savings in. Begin by delving into the history of a corporation to figure out its track record. A credible company will have a milieu of happy customers and a history of profitability. Make sure you conduct thorough research online and also compare all options available to you. Stay away from corporations that offer a phenomenal return rate on their FD but carries a dodgy reputation.
Additional Read: What is a Corporate Fixed Deposit?
What is Their Repayment History?
Believe it or not! In the past, there have been several cases where companies have occasionally defaulted on their FD payouts. There were also incidents where depositors received accrued sum owed to them late. Make sure to check for the repayment history before applying for a fixed deposit with any corporation. You can read about their repayment history online or ask your friends or acquaintances about a specific company if they have been past customers.
What is Their Credit History?
Rating agencies like CRISIL and ICRA rate corporate FDs on a 14-point rating system. The higher a company scores, the lower the investment risk. You can easily access a corporation’s credit history by logging on to the official CRISIL portal. Choose a corporation with a relatively higher CRISIL or ICRA rating. This way, you know that your money is in safe hands.
Additional Read: Things to Know About Corporate Fixed Deposits
Who Can Open a Corporate FD Account?
Here is a list of entities eligible to opt for this savings instrument:
- Individuals (both NRIs and non-NRIs)
- Other Companies and Corporations
- Educational institutions
- Hindu Undivided Family (HUF) members
- Clubs and societies
Need professional intelligence on which corporate FDs to invest in? Of course, you do! Learn all about the kind of tenures, withdrawal schemes, investment protection, and much more by reaching out to the experts at Tata Capital Wealth.
Whether you are an individual or an institution looking to maximise your wealth through a secure medium such as a corporate FD, we can help.