Company Fixed Deposit (corporate FD) is a term deposit which is held over fixed period at fixed rates of interest. Company Fixed Deposits are offered by Financial and Non-Banking financial companies (NBFCs). The maturities of various company fixed deposits can range from a few months to a few years.
What is Corporate fixed deposits?
Corporate fixed deposits are offered by companies. When companies need to raise cash in a hurry they offer fixed deposits at attractive interest rates. Investors are issued deposit certificates of different tenures at fixed interest rates.
Advantages of Corporate FD
Investing in a corporate fixed deposit of a short tenure is the way to go rather than invest in deposits of a longer tenure. One does not know what the business cycle (of the company) would be over a longer period of time and deposits of a shorter tenure are generally safer to invest in. However, one should avoid deposits in companies about which one knows little...They certainly come nowhere near the ease and comfort of a bank fixed deposit. A through research is necessary to invest in a corporate fixed deposit in order to gainfully profit from the higher interest rates offered