What are Company Fixed Deposits?
The deposits made by investors in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Along with manufacturing companies, financial institutions and Non-Banking Finance Companies (NBFCs) also accept these deposits.
Benefits of Company Fixed Deposits
Higher interest rate: The rate of interest is 2-4 percent high, as compared to the interest rate offered by banks on fixed deposits.
Regular income: Depending on the scheme, investors have the option to receive interest at monthly/quarterly/half-yearly/yearly intervals.
Lock-in period: The minimum lock-in period for most of the schemes is six months, i.e. investors can withdraw their money post six months, anytime.
TDS: TDS is not applicable if interest earned is equals to or less than 5,000 for a year in a single company.
Important things to consider
Investors must carefully read the application form
Check the rating of the company before investing
Do a background check of the company before putting money into it
Companies may change the interest rates on the fixed deposit schemes without any prior notice