Bajaj Capital, Fixed Deposits faqs

How are interest payments made ?
Interest is paid on monthly/quarterly/half yearly/yearly or on maturity basis and is sent either through cheque or ECS facility.

When is TDS deducted on the interest from Company Fixed Deposits ?
TDS is deducted if the interest on fixed deposit exceeds Rs.5000/- in a financial year.

Is there any scope of appreciation of principal ?
No, at the end of deposit period principal is returned to the deposit holder

How to choose a good company deposit scheme ?
» Ignore 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 incentive.
» For investors living in outstation city, check whether the company accepts outstation cheques and makes payment through at par cheques.

Which companies can accept Deposit ?
Companies registered under Companies Act 1956, such as:
» Manufacturing Companies.
» Non-Banking Finance Companies.
» Housing Finance Companies.
» Financial Institutions.
» Government Companies.

Upto what limits can a company accept deposit ?
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 by directors.
» 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.
»Loan or investment company can accept deposit upto one and half time of its net owned funds.

What is the period of the deposit
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.

Where not to Invest
» Companies which offer interest higher than 15%.
» Companies which are not paying regular dividends to the shareholder.
» Companies whose Balance Sheet shows losses.
» Companies which are below investment grade (A or under) rating.

There is an old saying “DON’T PUT All YOUR EGGS IN ONE BASKET”.
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.