Up to 8.25% interest: Best 3-year corporate FDs

Synopsis

Corporate FDs are offered by many companies, including Mahindra Finance, Bajaj Finserv, LIC Housing Finance, and PNB Housing Finance. The interest rate on these varies depending on the tenure amongst other things.

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In India, fixed deposits are the most preferred kind of investing. Selected corporates and NBFCs are allowed by RBI to take deposits for a set interest rate and duration, much like banks are. These kinds of deposits are known as corporate or company fixed deposits.

Corporate FDs provide guaranteed, predictable returns to help you financially safeguard your future. Investors have the choice to choose the cumulative option to build capital or the payout option to generate monthly income.

Up to 7.75% RD interest rate: SBI, PNB, Canara Bank, HDFC Bank, ICICI Bank, Yes Bank recurring deposit rates

Investors can select a corporate FD from different terms, interest rates, and financial institutions to meet your investment requirements. However, one should be careful when selecting the corporate FD and choose from a large selection of AAA and AA-rated company Fixed Deposits to get steady returns and considerably less volatility.

Corporate FDs are offered by many companies, including Mahindra Finance, Bajaj Finserv, LIC Housing Finance, and PNB Housing Finance. The interest rate on these varies depending on the tenure amongst other things.

Corporate fixed deposit interest rates

Company Name Credit Rating 3-year

tenure
Tenure range Additional interest rate for senior citizen
Shriram Finance* ICRA – AA+/Stable

IND AA+/Stable by India Ratings and Research
8.18% 12-60 months 0.50%
Mahindra Finance CRISIL – AAA/Stable India Ratings – IND AAA/Stable 8.05% 12-60 months 0.25%
Manipal Housing Finance Syndicate Ltd. ACUITE – ACUITE A 8.25% 12-60 months 0.25%
PNB Housing Finance Ltd. CRISIL – AA/Positive

CARE – AA/Positive
7.85% 12-120 months 0.30%
Sundaram Home Finance CRISIL – AAA/Stable

ICRA – AAA/Stable
7.75% 12-60 months 0.35%-0.50%
Muthoot Capital Services Limited CRISIL – A+/Stable 8.07% 12-60 months 0.50%
ICICI Home Finance CRISIL – AAA/Stable

ICRA – AAA/Stable

CARE – AAA/Stable
7.65% 12-120 months 0.25%
Can Fin Homes Ltd. ICRA – AAA/Stable 7.50% 12-60 months 0.50%
Bajaj Finance Limited CRISIL – AAA/Stable

ICRA – AAA/Stable
8.05% 12-60 months 0.25%
LIC Housing Finance Ltd. CRISIL – AAA/Stable 7.75% 12-60 months 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.

Note: Data is from Paisabazaar as on 24th January 2024

Important FAQs from SBI securities, an investor should know before investing in corporate FD.

Is it safe to invest in FDs of these Corporates?

The deposit scheme of these companies is ‘AA/AAA’ rated from independent rating agencies like CRISIL, ICRA & CARE (reaffirmed over the long period) which indicates credible track record & high to highest degree of safety when it comes to timely repayment of Interest and Principal investment amount.

Can NRI (Non-Resident Indian) invest in Corporate Fixed Deposits?

Yes, NRIs are allowed to invest in Corporate Fixed Deposits through NRO a/c, subject to certain terms and conditions. The maximum period for NRIs to invest in CFDs is 3 Years.

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.

Is there any benefit for Sr. Citizens?

Yes. Sr. Citizens would get additional interest from 0.25% – 0.50% in CFDs.

Tips for choosing a Corporate FD

According to the HDFC Securities website, consider these factors before choosing Corporate FD schemes to invest in.

  • 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.

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William Murphy

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