Why Firm FDs Offer Higher Interest Than Bank FDs — Know Before You Invest

Bank FD vs. Company Fixed Deposit Corporate Fixed Deposit is another name for Company Fixed Deposit (CFD). Although both bank and company FDs offer fixed income over a predetermined time period, the risk and return of each differ significantly.

In India, fixed deposits are the go-to choice for investments with steady returns and security. However, did you know that there are two different kinds of FDs? Bank FDs and company/corporate FDs are the first two sorts. The majority of people are ignorant about firm fixed deposits and only know about bank FD. In actuality, bank FDs and firm FDs, also known as corporate FDs, both offer fixed income over a predetermined time period, but the risk and return of each differ significantly.

Allow us to explain interest rates and risk factors associated with firm fixed deposits.

Company FD: What is it?

Corporate fixed deposits, sometimes referred to as Company Fixed Deposits (CFDs). Non-Banking Financial Companies (NBFCs) issue these FDs with the goal of raising money from the general population.

Similar to bank fixed deposits, company FDs have a fixed tenure and interest rate, however the interest rate is higher. Company FD is growing in popularity among investors since its interest rates are higher than those of bank fixed deposits.

Greater risk, greater payoff

The risk is the same for company FDs because they offer higher interest rates. In actuality, unlike bank fixed deposits, CFDs lack the Insurance and Loan Guarantee Corporation’s (DICGC) security insurance.

Strategies for Investing in Company FD

Before investing in firm or corporate FDs, one should verify the credit rating of the NBFC or FD issuing company, as they lack DICGC risk coverage. Examine the company’s historical performance, especially its repayment history, to determine its legitimacy.

Corporate FD Interest Rates

Company or corporate fixed deposit interest rates have ranged from 8.50 to 9 percent. These, however, are always evolving. Seniors receive 0.50% more attention.

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