- Corporate deposits or company fixed deposits are term deposits wherein you put your money for a fixed tenure at a fixed rate of interest.
- Corporate Fixed Deposits are issued by Housing Finance Companies (HFCs)/Non-Banking Financial Companies (NBFCs).
- Compared to Bank Fixed Deposits, company fixed deposits mostly have lower lock-ins and are bit more flexible in how the interest gets paid.
- They also offer higher interest rates than bank fixed deposits, especially the interest rates offered by public sector banks and major private sector banks.
- However, unlike Fixed Deposits opened with scheduled banks, corporate Fixed Deposits are not secured under the insurance cover offered by the Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary. Hence, depositors should carefully examine the ratings assigned by recognized rating agencies like CRISIL, CARE, ICRA, etc while selecting the corporate Fixed Deposits.
- Similar to Bank Fixed Deposits, a corporate fixed deposit can also be used to avail loan facility when you require the funds in case of an emergency. The sanctioned amount can vary from one financial institution to the other. Usually, it can go as high as 75% of the fixed deposit amount.
If you have a short-term financial goal such as saving for an international trip or buying a gift for your spouse, corporate fixed deposits can be a good investment option.
