FIXED INCOME
Corporate Fixed Deposits
A contracted rate, a fixed date, a different borrower.
What it is
A corporate fixed deposit is a deposit accepted by a company, NBFC or housing finance company for a fixed tenure at a fixed rate of interest. The mechanics mirror a bank FD: you commit a sum for a chosen period and receive interest at a contracted rate.
What changes is the borrower. NBFC and HFC deposit programmes operate under RBI directions; deposits accepted by other companies fall under the Companies Act, 2013. Most deposit programmes carry a credit rating from an agency such as CRISIL, ICRA, CARE or India Ratings – a published opinion on the issuer’s ability to pay you back.
One difference matters and is often glossed over: corporate deposits are not covered by DICGC deposit insurance, which applies to bank deposits up to ₹5 lakh. Your return rests on the issuer’s own strength. That is precisely why the rate is usually higher.
How it works
01
Pick the issuer and the rating band you are comfortable with.
02
Pick the tenure – commonly 12 to 60 months.
03
Pick the payout – cumulative, or interest paid monthly, quarterly, half-yearly or annually.
04
Complete KYC and apply; the issuer issues a fixed deposit receipt.
05
Interest is credited on the agreed schedule; principal is repaid at maturity.
06
Premature withdrawal is usually permitted after a minimum lock-in, at a reduced rate. Terms vary by issuer.
Many issuers offer an additional rate for senior citizens, and a small step-up on renewal.
Who it suits
1
Investors who want a contracted rate rather than a market-linked outcome.
2
Retirees and others who need a predictable periodic payout.
3
Investors willing to take measured, rated credit risk in exchange for a rate above a bank deposit.
4
Anyone building a maturity ladder across issuers and tenures.
Less suitable for: your emergency corpus, money you may need at short notice, or an investor unwilling to look at issuer financials and ratings.
Taxation
Interest is taxed under Income from Other Sources at your applicable slab rate. It is taxable as it accrues each year including on cumulative deposits, where nothing is actually received until maturity.
The issuer deducts TDS at 10% once interest paid to you crosses ₹10,000 in a financial year (the threshold for non-bank payers), and at 20% where PAN is not furnished. Eligible investors can submit Form 121 to avoid deduction. TDS is not your final liability the balance is settled through advance tax and your return.
No deduction under Section 80C is available on a corporate deposit.
Frequently asked
How is this different from a bank FD?
The borrower. A bank deposit is insured by DICGC up to ₹5 lakh per depositor per bank; a corporate deposit is not. Corporate deposits generally carry a higher rate as compensation for that credit risk.
Does the credit rating guarantee my money?
No. A rating is an opinion on the issuer’s ability to service the deposit, and it can be revised up or down during your tenure. It is a filter, not a guarantee.
Can I withdraw before maturity?
Usually yes, after a minimum lock-in period, at a rate lower than contracted. Some issuers restrict it further. Check the specific deposit terms before you commit.
What is the minimum investment?
It varies by issuer, and typically starts in the ₹10,000 to ₹25,000 range.
Can I hold it jointly or nominate someone?
Yes. Joint holding and nomination are available on virtually every corporate deposit programme.