Investing in company fixed deposits.
What are company fixed deposits ??
Many corporates/nonbanking finance companies offer investors the facility to place fixed deposits with them. The deposit rates offered by such companies could vary and depends on the rating assigned by credit rating agencies as well as their brand perception. Typically, the interest rates offered is slightly higher than that offered by nationalised and private sector banks. The interest earned through these deposits can be credited directly to an account or taken via a cheque. Some of the prominent fixed deposits on offer include HDFC Ltd, Mahindra Finance, Bajaj Finance, DHFL and LIC Housing Finance.
How does one invest in them?
You can invest in a company FD by filing in the relevant application and depositing it directly with the company or using the services of an agent. To be able to open these Fss you will need to provide a photograph and a selfattested ID proof. Minors, too, can open these fixed deposits. They'll have to apply through a guardian.
What is the tenure and minimum amount needed to invest?
These fixed deposits offer tenures that can range from 12 months to 60 months. The minimum amount that is accepted may vary from one company to another. Some companies maintain a minimum of Rs 10,000 while others may have minimum deposit amounts of Rs 25,000, or more. Once opened, additional deposits may be made into a fixed deposit as per the company's rules. Most companies offer cumulative and noncumulative interest rates. Some companies offer a slightly higher interest rate for senior citizens. However, remember that interest earned from fixed deposits is taxable, as per your income tax slab.
What do you check before opting for a company FD?
In the past there have been many instances where companies have defaulted on repaying investors. Fixed deposits being unsecured instruments investors must do their due diligence before committing their money and scrutinise each company carefully. The first thing to check for is credit rating. All fixed deposits carry a credit rating from an rating agency. Do not go for a company which has anything less than a AA rating. If the company is listed, look at the past financial track record of the company and go for companies which have been making continuous profits for the last three to five years. Ask your broker or advisor, about the servicing and past track record of the company
Many corporates/nonbanking finance companies offer investors the facility to place fixed deposits with them. The deposit rates offered by such companies could vary and depends on the rating assigned by credit rating agencies as well as their brand perception. Typically, the interest rates offered is slightly higher than that offered by nationalised and private sector banks. The interest earned through these deposits can be credited directly to an account or taken via a cheque. Some of the prominent fixed deposits on offer include HDFC Ltd, Mahindra Finance, Bajaj Finance, DHFL and LIC Housing Finance.
How does one invest in them?
You can invest in a company FD by filing in the relevant application and depositing it directly with the company or using the services of an agent. To be able to open these Fss you will need to provide a photograph and a selfattested ID proof. Minors, too, can open these fixed deposits. They'll have to apply through a guardian.
What is the tenure and minimum amount needed to invest?
These fixed deposits offer tenures that can range from 12 months to 60 months. The minimum amount that is accepted may vary from one company to another. Some companies maintain a minimum of Rs 10,000 while others may have minimum deposit amounts of Rs 25,000, or more. Once opened, additional deposits may be made into a fixed deposit as per the company's rules. Most companies offer cumulative and noncumulative interest rates. Some companies offer a slightly higher interest rate for senior citizens. However, remember that interest earned from fixed deposits is taxable, as per your income tax slab.
What do you check before opting for a company FD?
In the past there have been many instances where companies have defaulted on repaying investors. Fixed deposits being unsecured instruments investors must do their due diligence before committing their money and scrutinise each company carefully. The first thing to check for is credit rating. All fixed deposits carry a credit rating from an rating agency. Do not go for a company which has anything less than a AA rating. If the company is listed, look at the past financial track record of the company and go for companies which have been making continuous profits for the last three to five years. Ask your broker or advisor, about the servicing and past track record of the company
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