Banks provide a range of fixed deposit investment options tailored to meet the needs of both short-term and long-term investors. Fixed deposits boast numerous benefits. One of the key advantages is the assurance of a guaranteed return on your investment. Additionally, investing in fixed deposits offers tax benefits, as the returns are tax-free. Moreover, investors enjoy flexibility with fixed deposits, as they can select the investment duration and amount according to their preferences. Another perk is the possibility of obtaining a loan against your fixed deposit based on your investment. In case of emergencies, you have the option to close your fixed deposit and withdraw the funds immediately.
Numerous companies, corporates, and Non-Banking Financial Companies (NBFCs), akin to banks, gather and deposit funds for a predetermined period, offering interest in return. Corporate fixed deposits represent the fixed deposit schemes of these entities. Similar to bank fixed deposits, corporate FDs provide interest earnings and offer flexibility in choosing the investment amount and duration.
Corporate FD vs Bank FDs: Interest rates comparison
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 | 8.27 | 50 months and 5 years | 7.53% | 8.18% | 8.27% | 0.50% |
Mahindra Finance | CRISIL – AAA/Stable India Ratings – IND AAA/Stable | 8.05 | 3 years, 4 years and 5 years | 7.60% | 8.05% | 8.05% | 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/Positive | 7.85 | 36-47 months | 7.45% | 7.85% | 7.65% | 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% | 0.50% |
Bajaj Finance Limited | CRISIL – AAA/Stable ICRA – AAA/Stable | 8.1 | 3-5 years | 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 3rd April 2024 | |||||||
Source: Paisabazaar.com |
Bank Fixed Deposit Rates | |||||
Bank Name | Interest Rates (p.a.) | ||||
Highest slab | 1-year tenure (%) | 3-year tenure (%) | 5-year tenure (%) | ||
% | Tenure | ||||
PRIVATE SECTOR BANKS | |||||
Axis Bank | 7.20 | 17 months to less than 18 months | 6.70 | 7.10 | 7.00 |
Bandhan Bank | 7.85 | 500 days | 7.25 | 7.25 | 5.85 |
City Union Bank | 7.00 | 400 days | 6.75 | 6.50 | 6.25 |
CSB Bank | 7.75 | 401 days | 5.00 | 5.75 | 5.75 |
DBS Bank | 7.50 | 376 days to 540 days | 7.00 | 6.50 | 6.50 |
DCB Bank | 8.00 | 25 months to 26 months | 7.15 | 7.60 | 7.40 |
Federal Bank | 7.50 | 500 days | 6.80 | 7.00 | 6.60 |
HDFC Bank | 7.25 | 18 months to less than 21 months | 6.60 | 7.00 | 7.00 |
ICICI Bank | 7.20 | 15 months to 2 years | 6.70 | 7.00 | 7.00 |
IDFC First Bank | 8.00 | 500 days | 6.50 | 7.25 | 7.00 |
IndusInd Bank | 7.75 | 1 year to 2 years | 7.75 | 7.25 | 7.25 |
Jammu & Kashmir Bank | 7.10 | 1 year to less than 2 years | 7.10 | 6.50 | 6.50 |
Karur Vysya Bank | 7.50 | 444 days | 7.00 | 7.00 | 7.00 |
Kotak Mahindra Bank | 7.40 | 390 days to less than 23 months | 7.10 | 7.00 | 6.20 |
Nainital Bank | 7.05 | 400 days – Naini Plus 2023 Deposit Scheme | 6.70 | 6.25 | 5.75 |
RBL Bank | 8.10 | 18 months to 2 years | 7.50 | 7.50 | 7.10 |
SBM Bank India | 8.50 | Above 3 years 2 days to less than 5 years | 7.05 | 7.30 | 7.75 |
South Indian Bank | 7.40 | 400 Days | 6.70 | 6.70 | 6.00 |
Tamilnad Mercantile Bank | 7.75 | 444 days (TMB 444 – Special Deposit) | 7.00 | 6.50 | 6.50 |
YES Bank | 7.75 | 18 month to less than 2 years | 7.25 | 7.25 | 7.25 |
PUBLIC SECTOR BANKS | |||||
Bank of Baroda | 7.25 | Above 2 years to 3 years | 6.85 | 7.25 | 6.50 |
Bank of India | 7.25 | 2 years | 6.80 | 6.50 | 6.00 |
Bank of Maharashtra | 6.50 | 1 year | 6.50 | 5.75 | 5.75 |
Canara Bank | 7.25 | 444 days | 6.85 | 6.80 | 6.70 |
Central Bank of India | 7.25 | 555 days | 6.75 | 6.50 | 6.25 |
Indian Bank | 7.25 | 400 days – IND SUPER | 6.10 | 6.25 | 6.25 |
Indian Overseas Bank | 7.30 | 444 days | 6.90 | 6.50 | 6.50 |
Punjab National Bank | 7.25 | 400 days | 6.75 | 7.00 | 6.50 |
Punjab & Sind Bank | 7.25 | 444 days | 6.20 | 6.00 | 6.00 |
State Bank of India | 7.00 | 2 years to less than 3 years | 6.80 | 6.75 | 6.50 |
Union Bank of India | 7.25 | 399 days | 6.75 | 6.50 | 6.50 |
FOREIGN BANKS | |||||
Deutsche Bank | 8.00 | Above 1 year to 3 years | 7.00 | 8.00 | 7.50 |
HSBC Bank | 7.25 | 732 days to less than 3 years | 4.00 | 7.00 | 6.00 |
Standard Chartered Bank | 7.50 | 2 years to less than 3 years | 7.15 | 7.10 | 6.75 |
Source: Paisabazaar.com | |||||
Interest rates as of 3 April 2024 |
Senior Citizen Bank Fixed Deposit Rates | ||||||
Bank Name | Interest Rates (p.a.) | Additional rates offered to Super Senior Citizen* (over and above to senior citizen rates) | ||||
Highest slab | 1-year tenure (%) | 3-year tenure (%) | 5-year tenure (%) | |||
% | Tenure | |||||
PRIVATE SECTOR BANKS | ||||||
Axis Bank | 7.85 | 17 months to less than 18 months | 7.20 | 7.60 | 7.75 | — |
Bandhan Bank | 8.35 | 500 days | 7.75 | 7.75 | 6.60 | — |
City Union Bank | 7.50 | 400 days | 7.00 | 6.75 | 6.50 | — |
CSB Bank | 7.75 | 401 days | 5.50 | 6.25 | 6.25 | — |
DBS Bank | 8.00 | 376 days to 540 days | 7.50 | 7.00 | 7.00 | — |
DCB Bank | 8.60 | 25 months to 26 months | 7.65 | 8.10 | 7.90 | — |
Federal Bank | 8.00 | 500 days | 7.30 | 7.50 | 7.25 | — |
HDFC Bank | 7.75 | 5 years 1 day to 10 years & 18 months to less than 21 months | 7.10 | 7.50 | 7.50 | — |
ICICI Bank | 7.75 | 15 months to 2 years | 7.20 | 7.50 | 7.50 | — |
IDFC First Bank | 8.50 | 500 days | 7.00 | 7.75 | 7.50 | — |
IndusInd Bank | 8.25 | 1 year to 2 years | 8.25 | 7.75 | 7.75 | — |
Jammu & Kashmir Bank | 7.60 | 1 year to less than 2 years | 7.60 | 7.00 | 7.00 | — |
Karur Vysya Bank | 8.00 | 444 days | 7.40 | 7.40 | 7.40 | — |
Kotak Mahindra Bank | 7.90 | 390 days to less than 23 months | 7.60 | 7.60 | 6.70 | — |
Nainital Bank | 7.55 | 400 days – Naini Plus 2023 Deposit Scheme | 7.20 | 6.75 | 6.25 | 0.10% on all tenures |
RBL Bank | 8.60 | 18 months to 2 years | 8.00 | 8.00 | 7.60 | 0.25% on all tenures |
SBM Bank India | 9.00 | Above 3 years 2 days to less than 5 years | 7.55 | 7.80 | 8.25 | — |
South Indian Bank | 7.90 | 400 Days | 7.20 | 7.20 | 6.50 | — |
Tamilnad Mercantile Bank | 8.25 | 444 days (TMB 444 – Special Deposit) | 7.50 | 7.00 | 7.00 | — |
YES Bank | 8.25 | 18 month to less than 2 years | 7.75 | 8.00 | 8.00 | — |
PUBLIC SECTOR BANKS | ||||||
Bank of Baroda | 7.75 | Above 2 years to 3 years | 7.35 | 7.75 | 7.15 | — |
Bank of India | 7.75 | 2 years | 7.30 | 7.25 | 6.75 | 0.15% on tenures of 180 days to 10 years |
Bank of Maharashtra | 7.00 | 1 year | 7.00 | 6.25 | 6.25 | — |
Canara Bank | 7.75 | 444 days | 7.35 | 7.30 | 7.20 | 0.10% on 444 days |
Central Bank of India | 7.75 | 555 days | 7.25 | 7.00 | 6.75 | — |
Indian Bank | 7.75 | 400 days – IND SUPER | 6.60 | 6.75 | 6.75 | 0.25% on all tenures |
Indian Overseas Bank | 7.80 | 444 days | 7.40 | 7.00 | 7.00 | 0.25% on all tenures |
Punjab National Bank | 7.75 | 400 days | 7.25 | 7.50 | 7.00 | 0.30% for tenures up to 5 years |
Punjab & Sind Bank | 7.75 | 444 days | 6.70 | 6.50 | 6.50 | 0.15% on tenure of 444 days |
State Bank of India | 7.50 | 2 years to less than 3 years | 7.30 | 7.25 | 7.50 | — |
Union Bank of India | 7.75 | 399 days | 7.25 | 7.00 | 7.00 | 0.25% on all tenures |
FOREIGN BANKS | ||||||
Deutsche Bank | 8.00 | Above 1 year to 3 years | 7.00 | 8.00 | 7.50 | — |
HSBC Bank | 7.75 | 732 days to less than 3 years | 4.50 | 7.50 | 6.50 | — |
Standard Chartered Bank | 8.00 | 2 years to less than 3 years | 7.65 | 7.60 | 7.25 | — |
Note: *Depositors aged 80 years and above | ||||||
Source: Paisabazaar.com | ||||||
Interest rates as of 3 April 2024 |
Difference Between Corporate Fixed Deposits and Bank Fixed Deposits
Let us now look at the difference between corporate FDs and bank FDs as per broking firm Nirmal Bang’s website.
Tenure
Fixed Deposits serve as a popular choice for long-term investments, particularly for older investors aiming for a secure retirement. The tenure period plays a crucial role in determining when investors will receive returns before maturity. In corporate fixed deposits, the tenure typically ranges from six months to 5 years, offering a shorter duration compared to bank fixed deposits. Bank fixed deposits, on the other hand, provide tenures spanning from months to several years, often extending beyond what corporate fixed deposits offer. For those seeking to invest for extended periods, bank fixed deposits emerge as the preferred choice over corporate fixed deposits.
Investment risk
Before making any investment, it’s prudent to assess the associated risks and determine one’s risk tolerance. While fixed deposits are generally considered safe investments, they are not entirely risk-free, especially over the long term. Corporate fixed deposits, being unsecured, carry a higher level of risk, with the possibility of the company facing financial difficulties or even collapsing. However, one advantage of corporate fixed deposits is that they are not influenced by market fluctuations. In contrast, bank fixed deposits are secured investments and typically pose lower risks, providing investors with a higher level of security. In 2020, the government had increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.
Premature withdrawal penalty
In situations requiring urgent funds, individuals often consider withdrawing from their fixed deposits. However, both banks and corporates typically impose penalties for premature withdrawals before the completion of the tenure. When comparing the penalty structures of both financial institutions, bank fixed deposits tend to be a better option. Banks typically charge a penalty of around 1-2% on the interest for premature withdrawals. On the other hand, the scenario with corporates varies. Not all corporate entities permit premature withdrawal before three to six months from the investment date. In cases where premature withdrawal is allowed by corporates, no interest accrues on the deposit. Additionally, for withdrawals made after six to twelve months, certain companies impose a penalty ranging from 2-3 percent. Therefore, considering the penalty structures, bank fixed deposits may be a preferable choice for those anticipating the possibility of premature withdrawals.
Tips for choosing a corporate FDs
Before you invest in corporate FDs, consider these factors according to HDFC Securities website.
- Credit Rating: Opt for higher-rated corporate FDs based on its credit rating which indicates the underlying risk of the company.
- Company Background: Assess a company’s business viability by referring to its Financial Statements, Management Discussion and Analysis (MD & A).
- Repayment History: Companies repayment history helps to determine company’s credit score, credibility and stability.
Important FAQs on corporate FDs
As per the SBI Securities website, here are a few important FAQs on corporate FDs.
Bank FDs are regulated by RBI. Is there any regulatory authority who monitors corporate deposit schemes as well?
Yes. Corporate FDs, as issued by NBFCs & HFCs are regulated by Reserve Bank of India (RBI) & National Housing Bank (NHB) respectively.
In what way do I earn by investing in CFDs?
By investing in CFDs you could earn fixed interest for the entire tenure you have opted for. Apart from cumulative option where you get the interest along with the principle at maturity, there are various regular income options available including monthly, quarterly, semi-annually and annual. The maturity period ranges from 12-120 months. This gives you the flexibility to choose between short and long tenures based on the investment goals.
With how much min. amount I can start investing in CFDs?
The minimum & maximum deposit amount varies from issuer to issuer. Typically, investment could be started from as low as Rs. 25,000 and goes as high as Rs. 20 Crores for individual investors.
Is there any benefit for Sr. Citizens?
Yes. Sr. Citizens would get additional interest from 0.25% – 0.50% in CFDs.
Are the returns on Corporate FDs taxable? If yes, what is the TDS treatment?
Yes. Interest earned from Corporate FD is taxed as per the marginal tax slab rate of an individual. Also, 10% TDS is deducted from the interest payable if total interest earned by an individual is >=Rs. 5,000/- in a Financial Year.
Resident Individuals can avail exemption from TDS by submitting form 15G / 15H (as applicable). However, this declaration has to be submitted in every FY until maturity.
Can I take out my money before the maturity?
Yes. You can. However, there is a basic lock-in of 3 months from the date of deposit during which premature withdrawal is not allowed. Upon completion of 3 months, you could take the money out in case of any emergency by paying a nominal penalty on the interest. Source Link