Fixed Deposit: Company FDs currently offering interest rates up to 8.09%

Company FDs may give assured returns that could be higher than bank FDs albeit with moderate levels of risks involved.

The economic fallout of the Covid-19 pandemic has forced the Reserve Bank of India to cut the repo rate on multiple occasions in the recent past which, in turn, has resulted in banks lowering their fixed deposit interest rates. In fact, most of the public, private and foreign banks are currently offering interest rates between 2.3% and 6% per annum on their fixed deposits.

This comes as a concerning trend for risk-averse investors who rely heavily on bank deposits for their survival and fulfilment of financial goals. Many among them are looking for alternative investment tools, especially the ones that do not require a high risk appetite. One such alternative could be investing in slightly riskier company FDs after due diligence and risk assessment.

Company or corporate FDs are similar to bank FDs, but the depositors here park their money with the issuing company instead of banks. Company fixed deposits may give assured returns that could be higher than bank FDs albeit with moderate levels of risks involved and tenures are usually between 12 months and 120 months, informs BankBazaar.

Also, senior citizen depositors can get preferential rates up to 0.5% on company FDs. However, bank deposits are safer in comparison to corporate FDs while the former also come with a protection of Rs 5 lakh per bank from the Deposit Insurance and Credit Guarantee Corporation, something that doesn’t apply to company FDs.

That said, investors would be well-advised to check the credit ratings of the company FDs and invest in only those companies that carry AAA, AA and AA+ ratings from agencies like Crisil, ICRA, CARE, etc. Investors should realise that if the company they are investing in faces any financial problems, it may struggle to repay their debt in a timely manner. However, top-rated company FDs can be used for investment diversification in moderation to earn higher returns than bank FDs. Investors should also realise that company FD returns, just like bank FDs, are completely taxable according to the investor’s income tax slab, says BankBazaar.

So, if you’re looking to invest in a company FD, here are five options that are currently giving the highest returns. However, do note that this table is not exhaustive and doesn’t include companies that are currently not accepting fresh deposits.

Latest Company FD Rates and Ratings

Disclaimer: Data as on 4 September 2020. List not exhaustive. All issuers give an additional 0.25% interest rate to senior citizens, except for Sundaram Finance that gives 0.50%. Compiled by BankBazaar.com