Corporate FDs are a great investment option for higher returns, but they also carry more risk than regular FDs. Finance companies raise funds through corporate FDs. It is issued by housing finance companies or other NBFCs. In this, higher interest is available than regular FD.
However, an amount up to Rs 5 lakh invested in this is not insured under the Deposit Insurance and Credit Guarantee Corporation. That is, this insurance is not there in corporate FD. Money can also be lost if the company goes bankrupt.
Higher interest: Corporate FDs offer around 2-3% higher interest than regular FDs. 6% interest is available in regular FD, but up to 9% in corporate.
Easy Loan: Most companies offer easy loans against FD up to 75% of the maturity amount. The penalty for premature withdrawal is also less.
Interest Payment: Investors get the option of monthly, quarterly, half-yearly, and yearly to pay the loan interest.
· Corporate FD does not have this insurance. Money can also be lost if the company goes bankrupt.
· Before investing, definitely check the record of 10-20 years of the company.
· Invest only in corporate FDs with AAA and AA credit ratings.
· Invest in Corporate FDs of only those companies which are making a profit.
