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Corporate FD

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Corporate FD

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What is a corporate fixed deposit?

You can make a deposit with a Company in a similar way to a bank fixed deposit. The Company pays a slightly higher rate of interest on deposits made with them, than a bank fixed deposit for a fixed time period.

How safe are corporate fixed deposits?

Corporate fixed deposits are riskier than bank fixed deposits and do not enjoy the safety, bank deposits provide. Your money in a bank FD is guaranteed by the Deposit Insurance and Credit Guarantee Corporation up to INR 1 Lakh in the bank.

The deposits you make in a corporate fixed deposit are unsecure in nature. The Company could default on the interest payments to you, or worse not return your principal amount. You need to be assured that your money is in safe hands

Why invest in a Corporate Fixed Deposit

Higher Interest

You get a higher rate of interest than a fixed deposit. In times of inflation, you get higher returns, than other fixed income securities.

Safety Depending on Rating

An investment in corporate fixed deposits of high rating, is relatively safe. Higher the rating, more is its safety.


Benefits Senior Citizens

Senior citizens get a higher rate of interest than a younger person. NRI's can also invest in corporate fixed deposits.

Invest in Bank Corporate FD

If you invest in corporate fixed deposits of reputed banks, you have a higher degree of safety than private Companies.

Eligibility for Corporate Fixed Deposit

If you are a resident of India or an NRI, you can invest in a corporate fixed deposit. Senior citizens, housewives, charitable and religious institutions invest in a corporate fixed deposit.

How liquid are corporate fixed deposits?

You can make a premature withdrawal from a bank fixed deposit with a small penalty.

If you withdraw your money from a Company FD within 6 months after you deposit your money, no interest is paid to you.

If you withdraw your money from the Company FD within 6-12 months after the deposit date, you will get a lesser interest say 2-3% lesser than the actual interest rate promised.

How do you make sure your money invested in the corporate fixed deposit is safe?

You need to check the credit rating of the Corporate fixed deposits before investing your hard earned money with them.

Rating agencies like Crisil, rate corporate fixed deposits. If the corporate fixed deposit has a rating of FAAA, you can be rest assured your money is safe. This is the highest rating and guarantees that the Company will pay interest on the money deposited with them and return the principal amount you deposit with them.

If a Company has a high rating, it is easier for it to borrow money from you, as well as other people and it will offer a lesser rate of interest than say a lower rated corporate fixed deposit.

FAA rating are also highly safe, but not as safe as FAAA rated corporate fixed deposits and offer you a higher rate of interest to make up for the additional risk.

FA rated Company deposits are adequately safe. If the corporate fixed deposit has a rating of FB or FC, you need to be very careful, even if the Company pays you a high rate of interest on the deposits you make with them.

How to apply

  • You can approach the Company where you want to invest in a corporate fixed deposit. Many a time Companies place advertisements of their corporate fixed deposits in leading newspapers.

  • The tenure of a corporate fixed deposit is generally 1-5 years.

  • You can withdraw prematurely from your corporate fixed deposit under certain conditions.


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Concepts & FAQ's Corporate FD

What is a Corporate Fixed Deposit?

Corporate fixed deposits are similar to banking FD's, except that the money invested is with a company and not a bank. Deposits under corporate FD's are governed by the Companies Act under Section 58A.

However, these deposits are unsecured. Therefore, if the company defaults, the investor cannot sell the company to recover his/her capital. On the other hand, corporate FD's apart from giving a superior interest rate than banks, also provide investors with a short-term deposit option with only a six month lock in period as well as the benefit of having no income tax deducted at source if the interest income is up to Rs 5,000 in one financial year.

Please click here if you want to know more about corporate fixed deposits

Thinking of buying a Corporate Fixed Deposit ?

To be absolutely sure of WHAT TO LOOK OUT, talk to on the phone for FREE financial consultation.

Expert Financial Advisors from would provide you unbiased, correct and up to date information so that you can make an informed financial decision.

How to choose a good Corporate Fixed Deposit scheme?

  • Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFCs, RBI has made it mandatory to have an 'A' rating to be eligible to accept public deposits. One should go further and look at only AA+ or AAA schemes.

  • Within a given rating grade, choose the company with a better reputation.

  • Once you decide on a company, choose the schemes that have given a better return. Unless you need income regularly, you should prefer cumulative schemes to regular income options since the interest earned automatically gets reinvested at the same coupon rate, resulting in better yields. It also gives you a lump-sum amount at one go.

  • It is better to make shorter deposit of around 1 year to 3 years. This way, you can not only keep a watch on the company's rating and servicing, but also have your money back in case of an emergency.

  • Check on the servicing standards of the company. You should not invest in companies that care little about investor services, like promptly sending interest warrants or the principal cheque.

  • Involve your Financial Planner / Investment Advisor for advice in all your transactions. Do not bypass and invest directly.

Frequently Asked Questions

Will I get a FD receipt?

Yes, you will get FD receipt. But, you will not be issued a receipt for FD opened through Internet Banking.

Can I redeem my FD before the original term?

Yes, FD can be closed before the original term of the FD. In the event of the Fixed Deposit being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the bank. In case of premature withdrawal the deposit may be subject to penal rate of interest as prescribed by the company on the date of deposit.

How do I redeem my FD?

After maturity of your FD, you can walk into company and claim your deposit by furnishing your Fixed Deposit receipt/Memorandum of Deposit.

How are interest payments made ?

Interest is paid on monthly/quarterly/half yearly/yearly basis or on maturity, and is sent either through cheque or through Electronic Clearing System basis.

When is TDS deducted on the interest from Company Fixed Deposits ?

TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.

What are the Do's and Don'ts of investing in Company Fixed deposits


Check On Credit Ratings : A very important indicator. It highlights the underlying risk of the company. AAA rating denotes the highest safety. It indicates the financial health of the company and the ability to service its financial obligations. In simple words, AAA rating indicates that you can trust a particularly rated company with your money and expect it to pay the interest amount due to you. CRISIL and ICRA are India's leading credit rating and research institutes. They do a detailed research of the company and then rate them.

Check on promoter Credibility : Promoters play a substantial role in making or breaking a company. So always do a background check on them. Promoters with dubious or shaky records should be strictly avoided. Doing a background check on promoters is easier said than done so the safer route is to invest in fixed deposits of a blue-chip company.


Get lured by High interest rates : Any company offering a very high rate of interest should be a cause for concern. Companies generally offer high rate of interest to make up for the perceived risk attached with their offerings. So again don't get carried away with high rate of interest as they always come with high risk. The major risk in case of a company FD is that if the company is unable to repay your money, you end up losing it. But in case of banks, the rules are stricter and your money is safe as the bank FDs are insured up to Rs. 1 lakh.

Don't forget to check on past performance : Although past performances are generally not considered a very good indicator of the future of a company, one should not completely avoid it. Any investor must check the past payment history of the company. He should also check the investor service standards of the company.

Don't hesitate with regulator assistance : There are regulators to keep a check on any frauds or mishandling of public money by companies or mutual funds or exchanges. So in case your company defaults; check who the regulator is and lodge a complaint with them. For listed companies you can file your complaint with the Securities and Exchange Board of India. For manufacturing companies it is Department of Company Affairs. For banks and non-banking financial companies it is the Reserve Bank of India.


Corporate FD Articles

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Many investors want to invest in bonds as it assures a steady cash flow. Investors usually buy bonds when interest rates are low. But they are always concerned that a .

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Corporate FD News

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Home News

SBI will start selling electoral bonds from 1 March 2018

Wednesday, February 28, 2018, 5:05 PM

SBI largest public sector lender stated that it will start selling electoral bonds from 1 March, 2018. The electoral bonds or bearer banking instruments were announced by the govt in order to put a ceiling on political funding and also prevent seeping of black money into election time fundings. The EB scheme has been introduced for donors to pick up their own political parties.

Govt of India announces new Savings Bonds

Thursday, January 4, 2018, 4:05 PM

The Government of India on Thursday announced to launch 7.75 percent savings bonds to enable resident citizens and Hindu Undivided Families (HUF) to invest in a taxable bond, without any monetary ceiling. NRIs are however not eligible for making investments in these Bonds. These Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families (HUFs).

India Inc may need to change rating agencies every 3 years

Thursday, November 23, 2017, 10:27 AM

Companies tapping the debt market regularly may soon have to get their securities rated by a different credit rating agency every three years. The Securities and Exchange Board of India (Sebi) plans to bring in new rules mandating rotation of credit rating agencies after market participants sought an overhaul of governance requirements and levels of accountability for this industry.


Corporate FD Videos

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Corporate FD in Telugu - Bajaj Finserv Fixed Deposit Interest Rates Upto 7.25% | Ajay Kumar Kola

Corporate FD in Telugu - Bajaj Finserv Fixed Deposit Interest Rates Upto 7.25% | Ajay Kumar Kola

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Bank FD vs Corporate FD in Telugu - Are Corporate Fixed Deposits Safe | FD Interest Rates 2020

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Start your Journey to Become Rich with IndianMoney's Financial Freedom App, Download here:   In this video, I will explain Bank FD and Corporate FD, the difference between each of them, and which investment is better. So let us know Completely in detail.   Opening a Bank FD is very simple, either you open FD account online or visit a nearby branch to open a bank FD account. On average Bank FD interest rate is around 6% and you can opt for 7 days to 10 years. But in the case of Corporate FD, the interest rate is 7.5% higher than Bank FD and also carries a huge risk. The tenure of Corporate FD is 6 months to 5 years, which is completely depends on company policy. If you want more about Bank FD vs Corporate FD, please watch this video till the end.


Corporate FD Education

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Low-risk, High-return Financial Instruments: #3 Company Fixed Deposits

Monday, October 30, 2017, 6:13 AM

Fixed Deposits (FDs) have always been the go-to investments for Indians. However, there is another investment option that is almost as safe as Bank FDs but definitely has higher returns than those by banks—Company FDs. Their interest rates are usually 1–3% higher than bank FD rates. However, before investing in company FDs, it is advisable that you verify the ratings of the company.

What is a debt instrument?

Wednesday, July 26, 2017, 7:09 AM

A debt instrument is a paper or electronic legal obligation that enables the issuer to raise funds by promising to repay a lender the borrowed sum along with interest on a timely basis. It allows the lender to earn a fixed interest on it besides getting the principal back. Types of debt instruments include bonds, debentures, leases, certificates, bills of exchange, promissory notes etc.

Alternatives to fixed deposits: #4 Company fixed deposits

Saturday, May 27, 2017, 11:10 AM

By investing in company fixed deposits of top-rated firms, investors can earn up to 150 basis points more than bank fixed deposits. However, investors must exercise utmost caution because while bank deposits provide security for investment up to Rs 1 lakh, this is not the case with corporate fixed deposits. The tenure of company deposits ranges from one to seven years.



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