• Corporate FD vs Bank FD

    Published on August 01 2018

    Fixed deposits acts as a saving instrument. Fixed deposits earn the investor a higher rate of interest than a regular savings account. It is a term deposit where in the investor invests a lump sum amount at once and earns interest at regular intervals until the maturity date.

    It is a single time investment, the investor doesn’t have to make deposits every month. The money from the fixed deposit account cannot be withdrawn before the maturity date without consequences. In case of premature withdrawals, the interest is paid at the rate applicable at the time of the withdrawal.

    Fixed deposits are usually offered by banks and NBFCs.But what most people are unaware of is that fixed deposits are offered by companies too. Though the fixed deposits offered companies are very different from the fixed deposits offered by the bank. Let’s read on further to know more about Corporate fixed deposits and Bank fixed deposits.

    Bank Fixed Deposits

    Fixed deposits were offered by the bank first before other financial institutions and corporate companies. Most of the banks don’t insist on the customer being a savings account holder in the bank though being a savings account holder in the bank will entitle you to many perks. The customer can open a fixed deposit account with the bank either online or at one of the bank branches.

    To apply for a fixed deposit in a bank, the customer has to submit a few documents along with the application form. The rate of interest offered by the bank on the fixed deposits varies from each bank. It also depends on the amount deposited by the investor and the term for which it is invested.

    The fixed deposit account offered by the bank usually required the investor to deposit a minimum amount of money into the account. The rate of interest offered for bank fixed deposits is usually average and the longer the term the higher the interest offered.

    The bank fixed deposits are better suited for risk averse investors as there is not much risk involved in this investment.

    Corporate FD vs Bank FD

    Corporate Fixed Deposits

    Corporate fixed deposits are fixed deposits offered by corporate companies. The corporate fixed deposits work like the regular bank fixed deposits albeit a few changes. Corporate fixed deposits offer a higher rate of interest when compared to bank fixed deposits as the risk involved is higher when it comes to corporate fixed deposits.

    Applying for a corporate fixed deposit is no different from applying for a bank fixed deposit. The only difference here being that one should avail the application form either from the company’s official website or at the company itself.

    The risk with company fixed deposits is much higher though. There is the default risk where the company might not be able to return the maturity amount to the customer at maturity.This usually happens when the company has gone bankrupt or has been hit by the recession. The tenure period of a corporate fixed deposit usually ranges between 1-3 years.

    Corporate fixed deposit vs Bank fixed deposit

    Bank fixed deposit Corporate fixed deposit
    Offered by Bank Corporate company
    Rate of interest Average High
    Tenure period Ranges from months to years 6 months to 3 years
    Risk involved Low High
    Medium of investment Certificate of deposit Certificate of deposit

    Top Bank fixed deposits in India

    Listed below are the top bank fixed deposits in India.

    Top Corporate fixed deposits in India

    Listed below are the top corporate fixed deposits in India.

    • Ansal housing and construction
    • Ind Swift Ltd
    • Surya Roshni Ltd
    • Jindal stainless Ltd
    • Shri Ram

    Frequently Asked Questions

    1. Is the rate of interest offered for bank fixed deposits and corporate fixed deposits the same?

      No. The rate of interest offered on corporate fixed deposits is much higher.

    2. Which is riskier?

      Corporate fixed deposits are riskier when compared to bank fixed deposits.

    3. Do all corporate companies offer fixed deposits?

      No, not every corporate company offers fixed deposits.

    4. Can one avail loans against bank fixed deposits?

      Yes, one can avail loans against bank fixed deposits with no hassles.

    5. Are corporate fixed deposits safe?

      Given that the investor chooses the right company to invest in, it is safe.

    6. Is TDS deducted on the interest from Corporate fixed deposits?

      TDS is deducted on the interest if the interest on the deposit exceeds Rs.5,000 in a year.

    7. Can NRIs invest in corporate fixed deposits?

      Some corporate companies allow NRIs to invest in fixed deposits.

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