Sunday, March 3rd, 2024

Corporate FD vs Bank FD: Corporate FD has more interest than bank but also more risk, know these things before investing

Photo:India TV Corporate FD

recent days In the interest rates received by banks on fixed deposits have been increased several times. After this, many banks are paying interest at the rate of more than 7% on FD. However, compared to this, more interest is still being offered on corporate FDs. Shriram Finance is offering more than 8.50% interest on its Corporate FD. In such a situation, if you are preparing to get FD, then it would be right to choose between corporate FD, post office fixed deposit or bank FD. Let’s know…

What is Corporate FD

Let us tell you that companies bring corporate FDs to meet their business needs. In this, the period of FD ranges from 6 months to 5 years or more. To attract investors, companies offer higher interest rates in corporate FDs than bank FDs. However, it deals with the business of companies, so the risk involved is slightly higher than that of a bank. If the company defaults, there is a fear of losing money. On the other hand, FDs of strong and highly rated companies carry less risk. Bank FDs, on the other hand, are issued by banks. There is very little risk in this. Under any circumstances, in case of bankruptcy of the bank, FD up to five lakhs is fully secured. Its security is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned subsidiary of the Reserve Bank. This means that if the bank defaults under any condition, then your Rs 5 lakh will be guaranteed by the government.

Corporate FD

Image Source : BANK BAZAAR

Corporate FD

Keep these things in mind before taking a corporate FD

  1. Before taking a corporate FD issued by any company, check the rating of that company. Take corporate in a company which has got AAA or AAA+ rating. This will keep your money safe.
  2. Before taking a corporate FD, look at the operations and business area of ​​the company. Along with this, check the balance sheet of at least five years. Invest only when you get everything right.
  3. Always try to invest in corporate FDs of those companies which are making profits.

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