Corporate FDs and Bank FDs
According to ET, banks provide varied fastened deposit choices for each quick-time period and lengthy-time period traders.Fixed deposits include a number of advantages. They present a assured return on funding. Investors even have flexibility in selecting the funding length and quantity. Additionally, fastened deposits can be utilized as collateral for loans, and in emergencies, you can shut the deposit and withdraw funds immediately.
Many corporations, together with firms and Non-Banking Financial Companies (NBFCs), function like banks, gathering funds and providing curiosity for a set interval. Corporate fastened deposits are their model of fastened deposit schemes. Like financial institution fastened deposits, company FDs provide curiosity earnings and adaptability in selecting funding quantities and durations.
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Corporate FD vs Bank FDs: Difference in rates of interest
Corporate FDs typically tout greater rates of interest in comparison with financial institution FDs, with charges going as much as 9%. However, it is essential to contemplate varied components past simply the rate of interest.
| Company Fixed Deposit Rates | |||||||
| Company Name | Credit Rating | Interest Rates (% p.a.) | Additional rate of interest for senior citizen | ||||
| Highest Rate Slab | Applicable tenure | 1-yr tenure |
3-yr tenure |
5-yr tenure |
|||
| Shriram Finance* | ICRA – AA+/Stable IND AA+/Stable by India Ratings and Research |
8.27 | 50 months and 5 years | 7.53% | 8.18% | 8.27% | 0.50% |
| Mahindra Finance | CRISIL – AAA/Stable India Ratings – IND AAA/Stable | 8.05 | Three years, Four years and 5 years | 7.60% | 8.05% | 8.05% | 0.25% |
| Manipal Housing Finance Syndicate Ltd. | ACUITE – ACUITE A | 8.25 | 1 yr, 2 years and three years | 8.25% | 8.25% | 7.75% | 0.25% |
| PNB Housing Finance Ltd. | CRISIL – AA/Positive CARE – AA/Positive |
7.85 | 36-47 months | 7.45% | 7.85% | 7.65% | 0.30% |
| Sundaram Home Finance | CRISIL – AAA/Stable ICRA – AAA/Stable |
7.9 | Four years and 5 years | 7.45% | 7.75% | 7.90% | 0.35%-0.50% |
| Muthoot Capital Services Limited | CRISIL – A+/Stable | 8.38 | 5 years | 7.21% | 8.07% | 8.38% | 0.50% |
| ICICI Home Finance | CRISIL – AAA/Stable ICRA – AAA/Stable CARE – AAA/Stable |
7.65 | Three to lower than 5 years | 7.25% | 7.65% | 7.60% | 0.25% |
| Can Fin Homes Ltd. | ICRA – AAA/Stable | 7.5 | Three years | 6.50% | 7.50% | 6.75% | 0.50% |
| Bajaj Finance Limited | CRISIL – AAA/Stable ICRA – AAA/Stable |
8.1 | 3-5 years | 7.40% | 8.10% | 8.10% | 0.25% |
| LIC Housing Finance Ltd. | CRISIL – AAA/Stable | 7.75 | Three years and 5 years | 7.25% | 7.75% | 7.75% | 0.25% |
| *At Monthly Rests. Additional curiosity of 0.25% p.a on all renewals, the place the deposit is matured. Additional curiosity of 0.10% p.a. for girls depositors. | |||||||
| Data as on third April 2024 | |||||||
| Source: Paisabazaar.com | |||||||
| Bank Fixed Deposit Rates | |||||
| Bank Name | Interest Rates (p.a.) | ||||
| Highest slab | 1-yr tenure (%) | 3-yr tenure (%) | 5-yr tenure (%) | ||
| % | Tenure | ||||
| PRIVATE SECTOR BANKS | |||||
| Axis Bank | 7.20 | 17 months to lower than 18 months | 6.70 | 7.10 | 7.00 |
| Bandhan Bank | 7.85 | 500 days | 7.25 | 7.25 | 5.85 |
| City Union Bank | 7.00 | 400 days | 6.75 | 6.50 | 6.25 |
| CSB Bank | 7.75 | 401 days | 5.00 | 5.75 | 5.75 |
| DBS Bank | 7.50 | 376 days to 540 days | 7.00 | 6.50 | 6.50 |
| DCB Bank | 8.00 | 25 months to 26 months | 7.15 | 7.60 | 7.40 |
| Federal Bank | 7.50 | 500 days | 6.80 | 7.00 | 6.60 |
| HDFC Bank | 7.25 | 18 months to lower than 21 months | 6.60 | 7.00 | 7.00 |
| ICICI Bank | 7.20 | 15 months to 2 years | 6.70 | 7.00 | 7.00 |
| IDFC First Bank | 8.00 | 500 days | 6.50 | 7.25 | 7.00 |
| IndusInd Bank | 7.75 | 1 yr to 2 years | 7.75 | 7.25 | 7.25 |
| Jammu & Kashmir Bank | 7.10 | 1 yr to lower than 2 years | 7.10 | 6.50 | 6.50 |
| Karur Vysya Bank | 7.50 | 444 days | 7.00 | 7.00 | 7.00 |
| Kotak Mahindra Bank | 7.40 | 390 days to lower than 23 months | 7.10 | 7.00 | 6.20 |
| Nainital Bank | 7.05 | 400 days – Naini Plus 2023 Deposit Scheme | 6.70 | 6.25 | 5.75 |
| RBL Bank | 8.10 | 18 months to 2 years | 7.50 | 7.50 | 7.10 |
| SBM Bank India | 8.50 | Above Three years 2 days to lower than 5 years | 7.05 | 7.30 | 7.75 |
| South Indian Bank | 7.40 | 400 Days | 6.70 | 6.70 | 6.00 |
| Tamilnad Mercantile Bank | 7.75 | 444 days (TMB 444 – Special Deposit) | 7.00 | 6.50 | 6.50 |
| YES Bank | 7.75 | 18 month to lower than 2 years | 7.25 | 7.25 | 7.25 |
| PUBLIC SECTOR BANKS | |||||
| Bank of Baroda | 7.25 | Above 2 years to three years | 6.85 | 7.25 | 6.50 |
| Bank of India | 7.25 | 2 years | 6.80 | 6.50 | 6.00 |
| Bank of Maharashtra | 6.50 | 1 yr | 6.50 | 5.75 | 5.75 |
| Canara Bank | 7.25 | 444 days | 6.85 | 6.80 | 6.70 |
| Central Bank of India | 7.25 | 555 days | 6.75 | 6.50 | 6.25 |
| Indian Bank | 7.25 | 400 days – IND SUPER | 6.10 | 6.25 | 6.25 |
| Indian Overseas Bank | 7.30 | 444 days | 6.90 | 6.50 | 6.50 |
| Punjab National Bank | 7.25 | 400 days | 6.75 | 7.00 | 6.50 |
| Punjab & Sind Bank | 7.25 | 444 days | 6.20 | 6.00 | 6.00 |
| State Bank of India | 7.00 | 2 years to lower than Three years | 6.80 | 6.75 | 6.50 |
| Union Bank of India | 7.25 | 399 days | 6.75 | 6.50 | 6.50 |
| FOREIGN BANKS | |||||
| Deutsche Bank | 8.00 | Above 1 yr to three years | 7.00 | 8.00 | 7.50 |
| HSBC Bank | 7.25 | 732 days to lower than Three years | 4.00 | 7.00 | 6.00 |
| Standard Chartered Bank | 7.50 | 2 years to lower than Three years | 7.15 | 7.10 | 6.75 |
| Source: Paisabazaar.com | |||||
| Interest charges as of three April 2024 | |||||
| Senior Citizen Bank Fixed Deposit Rates | ||||||
| Bank Name | Interest Rates (p.a.) | Additional charges provided to Super Senior Citizen* (over and above to senior citizen charges) | ||||
| Highest slab | 1-yr tenure (%) | 3-yr tenure (%) | 5-yr tenure (%) | |||
| % | Tenure | |||||
| PRIVATE SECTOR BANKS | ||||||
| Axis Bank | 7.85 | 17 months to lower than 18 months | 7.20 | 7.60 | 7.75 | — |
| Bandhan Bank | 8.35 | 500 days | 7.75 | 7.75 | 6.60 | — |
| City Union Bank | 7.50 | 400 days | 7.00 | 6.75 | 6.50 | — |
| CSB Bank | 7.75 | 401 days | 5.50 | 6.25 | 6.25 | — |
| DBS Bank | 8.00 | 376 days to 540 days | 7.50 | 7.00 | 7.00 | — |
| DCB Bank | 8.60 | 25 months to 26 months | 7.65 | 8.10 | 7.90 | — |
| Federal Bank | 8.00 | 500 days | 7.30 | 7.50 | 7.25 | — |
| HDFC Bank | 7.75 | 5 years 1 day to 10 years & 18 months to lower than 21 months | 7.10 | 7.50 | 7.50 | — |
| ICICI Bank | 7.75 | 15 months to 2 years | 7.20 | 7.50 | 7.50 | — |
| IDFC First Bank | 8.50 | 500 days | 7.00 | 7.75 | 7.50 | — |
| IndusInd Bank | 8.25 | 1 yr to 2 years | 8.25 | 7.75 | 7.75 | — |
| Jammu & Kashmir Bank | 7.60 | 1 yr to lower than 2 years | 7.60 | 7.00 | 7.00 | — |
| Karur Vysya Bank | 8.00 | 444 days | 7.40 | 7.40 | 7.40 | — |
| Kotak Mahindra Bank | 7.90 | 390 days to lower than 23 months | 7.60 | 7.60 | 6.70 | — |
| Nainital Bank | 7.55 | 400 days – Naini Plus 2023 Deposit Scheme | 7.20 | 6.75 | 6.25 | 0.10% on all tenures |
| RBL Bank | 8.60 | 18 months to 2 years | 8.00 | 8.00 | 7.60 | 0.25% on all tenures |
| SBM Bank India | 9.00 | Above Three years 2 days to lower than 5 years | 7.55 | 7.80 | 8.25 | — |
| South Indian Bank | 7.90 | 400 Days | 7.20 | 7.20 | 6.50 | — |
| Tamilnad Mercantile Bank | 8.25 | 444 days (TMB 444 – Special Deposit) | 7.50 | 7.00 | 7.00 | — |
| YES Bank | 8.25 | 18 month to lower than 2 years | 7.75 | 8.00 | 8.00 | — |
| PUBLIC SECTOR BANKS | ||||||
| Bank of Baroda | 7.75 | Above 2 years to three years | 7.35 | 7.75 | 7.15 | — |
| Bank of India | 7.75 | 2 years | 7.30 | 7.25 | 6.75 | 0.15% on tenures of 180 days to 10 years |
| Bank of Maharashtra | 7.00 | 1 yr | 7.00 | 6.25 | 6.25 | — |
| Canara Bank | 7.75 | 444 days | 7.35 | 7.30 | 7.20 | 0.10% on 444 days |
| Central Bank of India | 7.75 | 555 days | 7.25 | 7.00 | 6.75 | — |
| Indian Bank | 7.75 | 400 days – IND SUPER | 6.60 | 6.75 | 6.75 | 0.25% on all tenures |
| Indian Overseas Bank | 7.80 | 444 days | 7.40 | 7.00 | 7.00 | 0.25% on all tenures |
| Punjab National Bank | 7.75 | 400 days | 7.25 | 7.50 | 7.00 | 0.30% for tenures as much as 5 years |
| Punjab & Sind Bank | 7.75 | 444 days | 6.70 | 6.50 | 6.50 | 0.15% on tenure of 444 days |
| State Bank of India | 7.50 | 2 years to lower than Three years | 7.30 | 7.25 | 7.50 | — |
| Union Bank of India | 7.75 | 399 days | 7.25 | 7.00 | 7.00 | 0.25% on all tenures |
| FOREIGN BANKS | ||||||
| Deutsche Bank | 8.00 | Above 1 yr to three years | 7.00 | 8.00 | 7.50 | — |
| HSBC Bank | 7.75 | 732 days to lower than Three years | 4.50 | 7.50 | 6.50 | — |
| Standard Chartered Bank | 8.00 | 2 years to lower than Three years | 7.65 | 7.60 | 7.25 | — |
| Note: *Depositors aged 80 years and above | ||||||
| Source: Paisabazaar.com | ||||||
| Interest charges as of three April 2024 | ||||||
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Key variations between Corporate FDs and Bank FDs:
Now, let’s check out the variations between company FDs and financial institution FDs in response to the data offered by Nirmal Bang’s web site.
Tenure
Fixed Deposits are generally chosen for lengthy-time period investments, particularly by older traders searching for a safe retirement. The length of the funding is essential in deciding when traders will obtain returns earlier than the maturity date. Corporate fastened deposits often have tenures starting from six months to five years, which is shorter in comparison with financial institution fastened deposits. Bank fastened deposits provide tenures spanning from months to a number of years, typically longer than company fastened deposits. For these eager about longer funding durations, financial institution fastened deposits are typically most popular over company fastened deposits.
Investment threat
Before investing, it is clever to judge the dangers concerned and perceive your personal threat tolerance. While fastened deposits are typically thought-about protected, they don’t seem to be completely threat-free, notably over the long run. Corporate fastened deposits, being unsecured, carry greater dangers, as there’s an opportunity of the corporate encountering monetary difficulties or failing, states the ET report. However, a good thing about company fastened deposits is that they don’t seem to be affected by market fluctuations. On the opposite hand, financial institution fastened deposits are secured investments with decrease dangers, offering traders with the next stage of safety. In 2020, the federal government elevated the insurance coverage cowl on deposits to Rs 5 lakh, offering added safety for traders. This enhancement in deposit insurance coverage got here into impact on February 4, 2020.
Premature withdrawal penalty
When pressing funds are wanted, people typically think about withdrawing from their fastened deposits. However, each banks and firms sometimes cost penalties for untimely withdrawals earlier than the completion of the tenure. Comparing penalty constructions, financial institution fastened deposits often have decrease penalties, sometimes round 1-2% on the curiosity for untimely withdrawals. Corporate fastened deposits fluctuate of their insurance policies; not all permit withdrawals earlier than three to 6 months from the funding date, and if permitted, no curiosity accrues. Additionally, for withdrawals made after six to 12 months, sure corporations might impose penalties starting from 2-Three p.c. Considering these penalties, financial institution fastened deposits could also be a greater choice for these anticipating untimely withdrawals.
Tips for selecting Corporate FDs
Before investing in company fastened deposits, it is important to contemplate the next components the report states:
1. Credit score: Look for company FDs with greater credit score rankings. These rankings replicate the underlying threat related to the corporate providing the FD. Higher rankings sometimes point out decrease threat.
2. Company background: Assess the enterprise viability of the corporate by inspecting its Financial Statements and Management Discussion and Analysis (MD & A). This data can present insights into the corporate’s monetary well being and efficiency.
3. Repayment historical past: Review the corporate’s reimbursement historical past to judge its credit score rating, credibility, and stability. A robust reimbursement historical past means that the corporate is dependable and able to honoring its monetary obligations.
