Investments in Corporate Fixed Deposits: Investment in India
Investments in Corporate Fixed Deposits, There are various options available for the individual to invest in securities or the deposits which are providing good interest rates. But for the company, there are fewer options available. The corporate fixed deposits are the deposits with the private agencies or the financial institutes which are not governed by Reserve Bank of India. They can maintain and utilize the funds there own way. Detailed features, factors to be taken care before investing and many other factors are important, which are mentioned here.
Investments in Corporate Fixed Deposits
Features of Corporate Fixed Deposits:
- Corporate Fixed Deposit tenure starts from 1 year which can exceed up to 5 years.
- The fixed deposits come with the ratings from the various credit rating agencies which decide the safety or the security of the deposits.
- These corporate fixed deposits are for a particular time period, which blocks the fund. There may be penalty provisions for premature withdrawals.
- The minimum amount for the investments varies from deposit to deposit but normally it is Rs. 10,000.
- The interest earned from the investment is much higher than the normal interest rates offered in the scheduled banks or nationalized banks.
Factors to be considered while investing in such deposits:
- The first and the foremost thing you need to do is to check the credit rating agencies rating. These credit rating agencies verify the various aspects of the company such as repayment capacity, interest payment duration, liquidity position, working capital cycle and find out the capacity of the company to repay the deposit. As there is no regulation by the RBI, there has to be someone who finds the credit capacity of the company.
- These deposits are not safe and secure as the bank deposits as these deposits are not regulated by any statutory body or the government body. So you need to evaluate the risk involved in investing in such securities. The default risk in these deposits is very much high due to which the utmost care needs to be taken during investing in it.
- Here the important thing to note is that you would not be getting the tax benefit as it is not the deduction which is mentioned under section 80C. So you need to make sure in the mind that the investment you are making is not eligible for deduction. On the other note, if the interest amount is also taxable under IFOS and if the interest amount is higher specified under rules of TDS, than TDS also will be deposited and cut from your interest.
- Pre-mature penalties are also levied by the companies who withdraw the money before the maturity period or the end of the tenure. This would be subject to penalty amount and you would be required to pay the same.
- There are various schemes under this policy which are eligible for more interest rates such as interest rates for employees and other person which are the relatives of the company but it also comes with the risks.
Top Corporate Fixed Deposits
- Omaxe Ltd
- Damodar Industries
- Kores India Ltd
- Darcl Logistics
- Bajaj Finance Ltd
- HUDCO Ltd
- JK Paper Ltd
- Gati Ltd
- Mahindra and Mahindra Finance Services
- HDFC Ltd
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