Company Fixed Deposit is the deposit placed by investors with companies for a fixed term carrying a prescribed rate of interest.

Interest is paid on monthly/quarterly/half yearly/yearly or on maturity basis and is sent either through cheque or ECS facility.

Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFC's, RBI has made it mandatory to have an 'A' rating to be eligible to accept public deposits, one should go further and look at only AA or AAA schemes.

Within a given rating grade, choose the company with a better reputation.

Once you decide on a company, next choose the schemes that has given a better return. Unless you need income regularly, you should prefer cumulative to regular income option since the interest earned automatically gets reinvested at the same coupon rate giving upon better yields. It also gives you a lump-sum amount at one go.

It is better to make shorter deposit of around 1 year to 3 years. This way you not only can keep a watch on the company's rating and servicing but can also plan to have your money back in case of emergency.

Check on the servicing standards of the company. You should not oblige companies that care little about investor services like promptly sending interest warrants or the principal cheque.

Involve your reputed Financial planner / Investment Advisor like us for advice in all your transactions. Do not bypass and invest directly just to earn an extra incentive.

For investors living in outstation city, check whether the company accepts outstation cheques and makes payment through at par cheques.

  • Companies which offer interest higher than 15%.
  • Companies which are not paying regular dividends to the shareholder.
  • Companies whose Balance Sheet shows losses.
  • Companies which are below investment grade (A or under) rating.

No, at the end of deposit period principal is returned to the deposit holder.

  • A Non-Banking Non-Finance Company(Manufacturing Company) can accept deposit subject to following limits
  • Upto 10% of aggregate of paid-up share capital and free reserves if the deposits are from shareholders or guaranteed by directors.
  • Otherwise upto 25% of aggregate of paid-up share capital and free reserves. A Non-Banking Finance Company can accept deposits upto following limits:
  • Equipment Leasing Company can accept four times of its net owned fund.
  • Loan or investment company can accept deposit upto one and half time of its net owned funds.

Company Fixed Deposits can be accepted by a Manufacturing Company having duration from 6 months to 3 years. Non-Banking Finance Company can accept deposit from 1 year to 5 years period. A Housing Finance Company can accept deposit from 1 year to 7 years.

TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.

  • Companies registered under Companies Act 1956, such as:
  • Manufacturing Companies.
  • Non-Banking Finance Companies.
  • Housing Finance Companies.
  • Financial Institutions.
  • Government Companies.

Company Fixed Deposit have always offered interest which is 2-3% higher than Bank Deposit rate. Because they have to pay higher interest to banks for borrowing money.

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