Corporate Fixed Deposits

WHY CORPORATE FIXED DEPOSITS?

This is a product most understood by investors. Amount remaining in bank account as savings is converted into fixed deposits. Banks however offer an interest which is not able to beat inflation. As a result, over a period of time the real value of savings lying in bank fixed deposits tend to be lesser in value. For eg. if bank interest rate is 5 % and inflation is 7% then the real earning will be 6.4 % less than actual i.e. 0.32 % reduction. In case of company fixed deposits, the returns are in range of 8-9 % hence a 0.32% reduction due to inflation will still give a better return.

SAFETY

Safety of corporate fixed deposits are certified by the rating given by rating agency. The rating agency determines the ability of the company to pay interest as well as principal to the investors. A high rating of say AAA indicates high safety of your interest and principal. Bank Deposits are also guaranteed only to the extent of Rs. 1 lac , provided the bank has paid the insurance premium. In short high rated Fixed Deposits are safe but carry some risk and give higher return

RETURNS

As sated above the returns on Corporate FDs are in range of 8-9%. Longer the period of investment higher is the interest rate. Cumulative schemes have compounding interest rates and hence offer a higher interest rate. Frequency of Interest payment depends on your requirements you may select monthly, quarterly, half yearly or yearly interest payment. Interest rates will vary as per the interest payment frequency elected by you. Some companies pay a higher rate of interest to Senior citizens of 0.25% over and above the normal rate of interest.

LIQUIDITY

Fixed Deposits are for a fixed period of time. In most companies No withdrawal is permitted in first 3-6 moths. There is a cut in interest rate if you withdraw prematurely. Withdrawal is not advised in normal circumstances. On completion of Fixed Deposit period the amount is credited to your bank account. In case you have changed your bank, account notify the company in advance to prevent delay in payment

Some of the Companies currently accepting Fixed Deposits

COMPANY INTEREST RATE Period Print Form / Rate Card Give Rating in a column Sr. citizen

SHRIRAM UNNATI FIXED DEPOSIT

8.30% 36 Months Download FormView Rates FAA 0.25%

BAJAJ FINANCE LTD.

7.10% 36 Months Download FormView Rates FAA 0.25%

MAHINDRA & MAHINDRA FINANCE LTD.

7.15% 36 Months Download FormView Rates FAA 0.25%

HDFC SPECIAL DEPOSITS UPTO 2 CRORE

6.65% 33 Months Download FormView Rates MAAA by ICRA and AAA/Stable by CRISIL 0.25%

HDFC LTD PREMIUM DEPOSIT PLAN (Upto 2 Cr)

6.46% 30 Months Download FormView Rates MAAA by ICRA and AAA/Stable by CRISIL 0.25%

HDFC Deposits Individual - Regular

6.46% 36 Months Download FormView Rates MAAA by ICRA and AAA/Stable by CRISIL 0.25%

PNB Deposits Individual- Regular

7.15% 36 Months Download FormView Rates AAA 0.25%

LIC HOUSING LTD

6.10% 36 Months Download FormView Rates FAA 0.25%

ICICI Home Finance Fixed Deposits

6.80% 36 Months Download FormView Rates MAAA 0.25%

TAXATION

Interest received on fixed deposit is subject to tax under the head Income from Other Sources for individual investors. Tax is deducted at source (TDS) in case the interest amount exceeds Rs. 5000/- Company will give a TDS certificate which should be claimed in your tax return. In case your income is not taxable then to prevent TDS, you should file Form 15G / H with the company.

REGULATORY FRAMEWORK

Acceptance of Fixed Deposit rules are framed under the Companies Act. There are strict rules on which company can accept Fixed Deposit and in case of Finance Company permission must be obtained from Reserve Bank of India to accept deposits. Though the repayment of interest and fixed deposit is not guaranteed by any regulator, there are stringent laws in each state eg. in Maharashtra there is Maharashtra Depositor's Protection Act, these laws give extra power to depositors in pursuing defaulting companies.

FIRST STEP FOR PLACING FIXED DEPOSIT

It is necessary to do your KYC with the company with whom you are placing the deposit. Following documents are necessary for place Fixed Deposit

a) Latest photograph b) Certified copy of the proof of identity (Passport, PAN (Mandatory), Voters ID, Driving License, Aadhar Card) c) Certified copy of the proof of address. – (Passport, Aadhar Card, Utility bill) which is not more than two months old from any of the following service provider – electricity, telephone, post-paid mobile phone, piped gas, water bill d) Certified copy of the proof of signature

Register now and start investing in Corporate Fixed Deposits

DOCUMENT OF OWNERSHIP

The Fixed Deposit receipt is your document of Ownership. Ensure that you obtain the same from the company. In case you wish to extend the period of FD on expiry of the tenure inform us to extent the FD for a further period as per your desire. The FD receipt is not transferable

JUST NOTE

Fixed Deposit can be put in name of minor, form to be signed by natural guardian. In event of death of Deposit holder proceeds will be credited to the account of deceased on giving Death certificate to company. In case there are joint holders with deceased , deposit receipt can be transferred in name of joint holders. Joint holder must give bank details to credit their interest. Fixed Deposits are accepted by cheque payment only, cash is never accepted by companies. Do not pay cash to anyone.