Corporate FDs are very much in trend these days and in this, customers get good returns along with hefty interest. But this type of FD comes with many difficulties and the risk of risk remains intact.
FD is often considered as the best investment option. FDs not only keep money safe, but you also get good returns in it. The special thing about FD is that you can easily withdraw money when needed. But FDs are also of many types and sometimes due to lack of information, you sign the wrong deal. Due to this you have to regret later, so do not decide on FD just by looking at the interest rate.
Many times due to high interest, people also get corporate FDs done, about which people know very little. In such a situation, let us know what this corporate FD is and what things should be kept in mind while getting this FD so that you do not face any difficulties later. Know that every single thing related to Corporate FD…
What is Corporate FD?
This FD is very different from bank FD and its terms and conditions are also very different. Corporate deposits are made on behalf of a company. Here the maturity period is usually from 6 months to 3 years. Some corporate FDs have a longer tenure as well. If a company defaults, then there is a risk of sinking your money, which is less in a bank FD.
Also, it works like a bank FD, just it is issued by the company. However, there are many reliable companies in the market, which have very low risk. Risk is the most important difference between both the FDs.
No responsibility
Bank deposits up to Rs 5 lakh are safe. It gets insurance cover under the Deposit Insurance Credit Guarantee Corporation (DICGC). However, there is no such insurance cover in a company FD. In this case, your money depends on the financial health of the company. This is the reason why depositors should thoroughly check their credit rating and financial health before investing money in FDs of companies.
If you want to get a company FD, then it is advisable to invest in a company FD with a higher rating of AAA or similar grade. Generally, non-banking financial companies offer FDs ranging from 12 months to 60 months. There are two types of interest payment options in a company FD. They are cumulative and con-cumulative. In Con-cumulative Deposit, interest is paid on monthly, quarterly, half yearly and yearly basis.
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