All you need to know about company Fixed Deposits in India

Along with bank fixed deposits (FDs), company FDs have been one of the most popular modes of investment among most Indians. Offering higher returns than the market average, company FDs have gained a lot of traction in the past few years. If you are willing to invest your money in company FDs but are not aware of where and how to do it, read on to find the answers.

How to invest in company FDs?

There are primarily two modes through which you can invest in company FDs – via agent/broker or directly with the company.

  • Investing through agents/brokers

There are many agents/brokers who are authorized by companies to sell their FDs. They will guide you through the entire process of investing in company FDs, help you to fill up forms, collect cheque/money and give you the final document. Offering doorstep services, these agents are your best bet if you are short on time to personally visit the company and do the required documentation for booking its FD.

  • Directly through the company

You can also visit the company directly whose FD you want to invest in.  Just visit the nearest branch of the company, fill up the form, submit the relevant KYC documents and your FD is ready. To facilitate FD investments for customers who like to do things on the go, many companies have made the entire process online. For instance, for investing in Bajaj Finance FD, which offers an FD interest rate of above 8%, you can fill up an application form online to complete the process.

Essential things to remember before you invest in company FDs

While you can opt for company FDs in any of your preferred modes, it is essential to remember these things prior to investing:

  • Comparison of rate of interest

Before investing in a company’s FD, take out some time to research the various available interest rates. Falling FD interest rates have been a major cause of concern for those who depend on its income for addressing various needs. There are many aggregator websites from where you can obtain information regarding interest rates offered by different companies. You can use any FD calculator to know the maturity amount.

  • Safety of deposit

Before investing in a company FD, gauge its safety. Generally, company FDs are slightly riskier than bank FDs as they aren’t guaranteed against its assets. Also, in case of a financial crunch, the company may default on its payments.  Institutions such as CRISIL and ICRA rate company FDs. If the rating is AAA, it means the investment is secure. For instance, Bajaj Finance Fixed Deposit enjoys an MAAA rating from ICRA and FAAA rating from CRISIL, which reflects its high security.

  • Background check of company

Prior to investing in a company FD, make sure you do an essential check on the company’s background and its financial performance. Check out its past performance to gauge the safety of your investment.

At a time of falling FD interest rates from banks, company FDs enable you to generate higher inflation-adjusted returns. Also, with most companies giving you the option of booking it online along with flexible tenor, company FDs can match your liquidity needs at various stages of life.

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