Equity Mutual Funds
Invest in a diversified basket of company shares, managed by professional fund managers, with the aim of building wealth over the long term.
Corporate FDs
Fixed deposits from well-rated NBFCs and housing finance companies, with a choice of tenures and payout options — booked online or from your doorstep.
- Risk level
- Moderate risk
- Minimum investment
- Varies by issuer, typically from ₹5,000
What Are Corporate FDs?
Corporate Fixed Deposits (FDs) are fixed-term deposit instruments offered by Non-Banking Financial Companies (NBFCs), housing finance companies, and other corporate entities. Investors deposit a specified amount for a predetermined tenure and earn interest at the rate offered by the issuer.
Unlike bank deposits, corporate FDs carry issuer-specific credit risk and are generally not covered by DICGC deposit insurance.
Categories of Corporate FDs
Corporate FDs can be classified based on their interest payout structure and credit rating.
- Cumulative FDs: Interest accumulates over the deposit tenure and is paid along with the principal at maturity.
- Non-Cumulative FDs: Interest is paid periodically, such as monthly, quarterly, half-yearly, or annually, depending on the scheme.
- Credit Rating: Corporate FDs are rated by credit rating agencies based on their assessment of the issuer’s creditworthiness. Ratings may range from AAA to lower rating categories.
Key Features of Corporate FDs
- Minimum Investment: Typically ranges from ₹5,000 to ₹25,000, depending on the issuer and deposit scheme.
- Liquidity: Premature withdrawal may be subject to restrictions, penalties, or reduced interest payouts. Applicable conditions vary by issuer and scheme.
- Credit Risk: Corporate FDs are exposed to the risk of issuer default, delayed repayments, and credit rating downgrades.
- Deposit Insurance: Corporate FDs are not covered by DICGC deposit insurance, unlike eligible bank deposits.
- Credit Ratings: Investors should review the rating agency, the specific rating assigned, and the date of the latest rating assessment rather than relying solely on a rating label.
- Taxation: Interest earned is generally taxable according to the investor’s applicable income tax slab. Tax Deducted at Source (TDS) may apply, subject to prevailing tax rules.
Risks to Consider
Before investing in a corporate FD, investors should evaluate the issuer’s financial strength, credit rating, deposit tenure, interest payout terms, and premature withdrawal conditions.
Higher interest rates may indicate higher credit risk. Investors should assess whether the additional return adequately compensates for the risk of delayed payments or potential loss of principal.
Corporate FDs: common questions
Are corporate FDs as safe as bank FDs?
No. Corporate FDs are not covered by the DICGC deposit insurance that applies to bank deposits. Repayment depends on the financial strength of the company, which is why the credit rating matters. Choose well-rated issuers and avoid concentrating in one company.
Can I withdraw a corporate FD early?
Under RBI rules, there is usually a lock-in of three months. After that, premature withdrawal is generally allowed with a reduction in the interest rate. The exact terms differ by issuer.
Is the interest taxable?
Yes. Interest is added to your income and taxed at your slab rate. The company deducts TDS if your interest crosses the applicable threshold, unless you submit Form 15G or 15H where eligible.
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Debt Mutual Funds
Funds that invest in bonds, government securities and money-market instruments — typically steadier than equity funds, and useful for short to medium-term money.
Hybrid Mutual Funds
One fund that combines equity and debt — and sometimes gold — to balance growth potential with stability.
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