You get more returns than bank FD here, but not even a single penny is guaranteed
Investment in Corporate FD: The Reserve Bank of India has continuously increased the interest rates in the last few months, due to which many banks are paying more interest on other savings schemes including FDs. In this race, some banks are offering 8 to 9 per cent interest by going ahead of government banks. Because of this, people are preferring to invest more in the company or corporate FDs. But it also has some risks. Let us know the important information related to corporate FD…
Since more interest is available in corporate FD as compared to government and private bank fixed deposits. Therefore the level of risk is also high in it. The biggest reason for this is the absence of a credit guarantee.Corporate or company FDs are mostly issued by non-banking finance companies. But there is no credit guarantee in these, so before investing in them, the rating of the concerned company should be known thoroughly. (Shakti knowledge)The Deposit Insurance and Credit Guarantee Corporation offers a protection cover of up to ₹5 lahks on bank FDs, but not in the case of corporate fixed deposits. Usually, the government gives a credit guarantee of up to Rs 5 lakh on the amount deposited in banks.Actually, companies need money for business, so they can raise funds from banks, equity investors or the public in the form of fixed deposits and RBI allows this. That’s why these companies offer higher interest on FD to raise money.Before investing in a company or corporate FD, one must check the credit rating of these company fixed deposits. You should invest only in a company with a high credit rating, this will keep your money safe. Many NBFCs in the country are paying 8 to 9 per cent interest on FDs. Among these, Utkarsh Small Finance 8.25%, Ujjivan Small Finance Bank 8.20%, and Suryoday Small Finance Bank is offering interest of up to 8.50%. At the same time, the interest rate available to senior citizens is 9 per cent.
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