Top Rated Corporate FDs With The Highest Interest Rates Up To 9%
Corporate fixed deposits are prominent, even at a considerably higher risk, but this can be a consideration for investors who want to generate returns higher than what bank FDs. That being said, much like FDs, at the income tax rate, interest on corporate FDs is completely taxable. Investment instruments provided by Non-Banking Financial Companies or NBFCs are commonly regarded as corporate fixed deposits or company fixed deposits. Usually, we always recommend that AA or AAA-rated FDs can be considered, which means that the level of security in terms of timely payment is good. Now let us find and evaluate the best interest rates of a company/corporate FD applicable to the fixed deposit investors at present.
For whom a company FD can be the best
You can consider company FDs if you have short-term financial priorities but do not want riskier alternatives such as stocks or mutual funds in your portfolio. It is a fact that company FDs offer higher returns than bank FDs, but for deposit insurance of up to Rs. 5 lakh, which is only for bank FDs, company FDs are not covered by the DICGC. This is now a field of importance but to minimize your concern you should verify the credit fitness of the respective organization to fix it.
Documents required to invest in corporate FDs
In order to invest in corporate FDs one must keep the below given basic documents ready:
- Identity proof: Aadhaar card, PAN, Driving License, Voter ID Card, 2 colour passport-size photographs
- Residence proof: Aadhaar, Voter id card, ration card, utility bills
- Income proof: Bank statement, salary proof, NREGA job card, employee ID and IT return
Pros of investing in corporate FDs
Corporate FDs operate with the promise of assured returns and versatility of tenure choices, comparable to banks. And, a higher interest rate than bank FDs is also provided by corporate FDs. But what are the other pros of it, let's check out.
- Like bank fixed deposits, one of the greatest advantages of investing in corporate fixed deposits is that they have the promise of an assured return. And, you can even know the precise amount that you will earn after maturity at the time of the investment itself.
- Company fixed deposits give a marginally higher interest rate of 0.25 per cent for elderly people just like bank deposits. This is an added benefit for senior citizens who are elderly and dependent on fixed deposit returns for their retirement.
- Usually, the duration of a corporate fixed deposit varies from one to five years. And within that set, you have the freedom to select any period. The interest rate will, though, vary accordingly, - for example the longer the tenure, the better the returns.
Cons of corporate FDs
To invest in AAA-rated corporate fixed deposits are always recommended by us to the investors. But there are some drawbacks which must also be considered by the depositors.
- Corporate FDs, if compared to bank FDs, do not bear any capital security guarantee.
- Neither these instruments ensure any capital protection nor any interest payouts. If a company faces financial pressure, an investor may lose his capital.
- Return from corporate FDs is applied to the income of the investor and charged as per the investor's tax slab rate. Corporate FDs do not seem enticing to those who fall inside the higher tax bracket.
- Usually, corporate FDs come with a lock-in duration of three years. No facility for partial withdrawal is open. In the case of making a withdrawal before the FD matures, an investor will also have to lose some interest.
Corporate FD Rates
| Corporates | Tenure | ROI in % | Rating(w.e.f. July 2020) |
|---|---|---|---|
| Hawkins Cooker FD | 12-36 | 9 | MAA/Stable by ICRA |
| Shriram City Union Finance | 12-60 | 8.09 | MAA+/Stable by ICRA and tAA by Ind-Ra |
| Shriram Transport Finance | 12-60 | 8.09 | FAAA/Negative by CRISIL,MAA+/Stable by ICRA,tAA+/Stable by Ind-Ra |
| HUDCO | 12-60 | 7.3 | MAAA/Stable by ICRA, AAA by CARE,tAAA by Ind-Ra |
| PNB Housing Finance | 12-60 | 6.70 | FAAA/Stable by CRISIL and MAAA/Stable by ICRA |
| Bajaj Finance | 12-120 | 7.00 | CRISIL FAA+/Negative, AA/Stable by CARE |
| Sundaram Home Finance | 36-60 | 6.25 | FAAA/Stable by CRISIL , MAAA/Stable by ICRA |
| Sundaram Finance | 12 | 6.22 | FAAA/Stable by CRISIL |
| HDFC | 33-66 | 6.20 | FAAA/Stable by CRISIL, MAAA/Stable by ICRA |
| Mahindra Finance | 12-60 | 5.9 | FAAA/Stable by CRISIL |
| ICICI Home Finance | 12-120 | 6.10 | FAAA/Stable by CRISIL, MAAA/Stable by ICRA and AAA by CARE |
| LIC Finance | 12-60 | 5.75 | FAAA/Stable by CRISIL |
Conclusion
Based on how good they are in every aspect, ratings such as AAA, AA, BBB, and so on are given to the corporations. The highest rating is AAA which reveals that the corporation has a strong capital structure. Different credit rating firms, such as CRISIL, ICRA and CARE, specify the credit performance of these non-banking financial companies (NBFCs). Check for an acceptable 'Stable' grade from credit-rating companies before investing. You can rethink if it's less than standard. Invest in a high corporate fixed deposit if you have a target that needs to be reached within 1 to 5 years. This gives you the stability of a fixed-income tool and also offers a better yield than bank FDs.