In February 2023, the Reserve Bank of India (RBI) increased the repo rate to 6.50 per cent. Concomitantly, various banks and finance houses have increased their FD interest rates. Furthermore, the interest rates of company fixed deposits are higher compared to the FDs offered by major public and private sector banks. For instance, Bajaj Finance FDs offer interest rates of up to 8.20 percent, while SBI offers interest rates of up to 7.60 percent on FDs.
This provides investors with an excellent opportunity to park their corpus in a company fixed deposit and enjoy higher returns. Considering inflation, it is imperative that you choose a financial institution that offers the best returns. Additionally, company fixed deposits offer flexible tenors; you can opt for an FD with a term between 12 and 60 months.
What is a Company Fixed Deposit?
A company fixed deposit (FD) is an investment instrument offered by a company that allows investors to earn a fixed rate of return over a predetermined period. Company FDs are considered to be a relatively safe investment option. They are not subject to the same level of market fluctuations as other investments, such as stocks or mutual funds.
Moreover, you can consult the safety ratings provided to financial institutions before investing your corpus. For example, Bajaj Finance FDs have been given the AAA/Stable rating by CRISIL and ICRA, two of the top credit rating agencies in the country.
Which Companies Can Accept Deposits?
Not all Non-Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs) can raise deposits from individuals. The company must have a Certificate of Registration (CoR) from the RBI, and should be permitted to accept public deposits. Furthermore, the financial assets managed by the company should be more than ₹5,000 Crores.
Housing Finance Companies that have specific licenses or permits from the Ministry of Corporate Affairs (MCA) can accept deposits up to a certain limit. These regulations put in place by RBI and MCA, in addition to the mandatory minimum credit ratings, ensure that your deposits are safe.
Why Should You Invest in a Company Fixed Deposit?
As previously mentioned, company fixed deposits offer numerous benefits over bank deposits. Apart from the inflation-beating returns through high FD interest rates and flexible tenors, here are a few other benefits of investing in a company FD.
- Fixed Returns: Unlike other investments, such as stocks or mutual funds, company FDs offer a fixed ROI over a specified period. This makes it easier for investors to plan their finances and budget accordingly.
- Safety: Company fixed deposits are backed by the company’s reputation and financial stability. Company FDs, such as Bajaj Finance FDs, are backed by AAA/Stable ratings by credit rating agencies such as CRISIL and ICRA. These are also some of the highest safety ratings offered by credit rating agencies, and indicate the lowest credit risk for depositors.
- Flexible Payouts: Company FDs can be non-cumulative; that is, the interest can be paid monthly, quarterly, semi-annually, or annually to the investor. This allows individuals that need a steady income source to get payments at regular intervals.
- Higher Returns for Senior Citizens: If you are a senior citizen, you will enjoy higher returns. For instance, Bajaj Finance FDs offer interest rates of up to 7.95 percent to non-senior citizens, and FD interest rates of up to 8.20 percent to senior citizens.
- Lock-in Period: Bank fixed deposits come with long lock-in periods, and harsh penalty charges on premature withdrawals. For instance, tax-saving FDs come with a lock-in period of 5 years without the possibility of premature withdrawals. Additionally, no loans or overdraft facilities are provided with tax-saving FDs. However, company FDs like Bajaj Finance FDs allow you to withdraw the amount after the first three months. Only a small penalty is levied on the applicable interest rate if you withdraw the amount after six months but before the FD’s maturity date.
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Get Up to 8.20 Percent Returns
By parking your money in a Bajaj Finance FD, you can expect segment-high returns of up to 8.20 percent per annum. Fixed deposits have always been the preferred investment option for risk-averse investors, as these are low-risk instruments. Furthermore, returns on fixed deposits are unaffected by market volatility, making them a safe haven for individuals.
Bajaj Finance FDs are also backed by strong credit ratings. You can opt for a non-cumulative FD with regular interest payouts, and benefit from a steady income source to meet your financial obligations. Moreover, the application process is convenient and straightforward. You can apply for a company fixed deposit online in just a few minutes without the need for any paperwork.
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