Company Fixed Deposit is
the deposit placed by investors with companies for a fixed
term carrying a prescribed rate of interest.
Company Fixed Deposit have always offered interest
which is 2-3% higher than Bank Deposit rate.Becaue they
have to pay higher interest to banks for borrowing money.
Interest is paid on monthly/quarterly/half yearly/yearly
or on maturity basis and is sent either through cheque
or ECS facility.
TDS is deducted if the interest on fixed deposit
exceeds Rs.5000/- in a financial year.
No, at the end of deposit period principal is returned
to the deposit holder
the unrated Company Deposit Schemes. Ignore deposit
schemes of little known manufacturing companies. For
NBFC’s, RBI has made it mandatory to have an ‘A’ rating
to be eligible to accept public deposits, one should
go further and look at only AA or AAA schemes.
Within a given rating grade, choose the company
with a better reputation.
Once you decide on a company, next choose the schemes
that has given a better return. Unless you need income
regularly, you should prefer cumulative to regular income
option since the interest earned automatically gets
reinvested at the same coupon rate giving upon better
yields. It also gives you a lump-sum amount at one go.
It is better to make shorter deposit of around 1
year to 3 years. This way you not only can keep a watch
on the company’s rating and servicing but can also plan
to have your money back in case of emergency.
Check on the servicing standards of the company.
You should not oblige companies that care little about
investor services like promptly sending interest warrants
or the principal cheque.
Involve your reputed Financial planner / Investment
Advisor like us for advice in all your transactions.
Do not bypass and invest directly just to earn an extra
For investors living in outstation city, check whether
the company accepts outstation cheques and makes payment
through at par cheques.
registered under Companies Act 1956, such as:
Non-Banking Finance Companies.
Housing Finance Companies.
A Non-Banking Non-Finance Company(Manufacturing
Company) can accept deposit subject to following limits.
Upto 10% of aggregate of paid-up share capital and free
reserves if the deposits are from shareholders or guaranteed
Otherwise upto 25% of aggregate of paid-up share capital
and free reserves.
A Non-Banking Finance Company
can accept deposits upto following limits:
Equipment Leasing Company can accept four times of its
net owned fund.
or investment company can accept deposit upto one and
half time of its net owned funds.
Company Fixed Deposits can be accepted by a Manufacturing
Company having duration from 6 months to 3 years. Non-Banking
Finance Company can accept deposit from 1 year to 5
years period. A Housing Finance Company can accept
deposit from 1 year to 7 years.
Companies which offer interest higher than 15%.
which are not paying regular dividends to the shareholder.
Companies whose Balance Sheet shows losses.
Companies which are below investment grade (A or under)
The company deposits should be
spread over a large number of companies. This will
help the investor to diversify his risk among various
companies/industries. Investors should not put more
than 10% of their total investible funds in one company.