Key Parameters To Review A Corporate Fixed Deposit

Key Parameters To Review A Corporate Fixed Deposit

What is corporate fixed deposit?

Corporate fixed deposit is an investment instrument offered by non-banking financial companies (NBFCs) wherein a lump sum amount is invested for a fixed time period at a predetermined interest rate. It offers promising and assured returns irrespective of market conditions. This type of fixed deposit has a higher interest rate than the traditional fixed deposits offered by banks. Hence it is gaining popularity among investors across all age groups.

Why is it required to review a corporate fixed deposit?

It is advisable to do due diligence whenever you decide to invest. In order to minimize your risks as much as possible, it is important that you analyze every aspect of the investment. This is to ensure that you don’t lose your hard earned money.

How to review a Corporate Fixed Deposit

Here are some key parameters to review a corporate fixed deposit:

  • Track record of the financier: Good track record of the financier is always one of the factors that you must look at while investing in a corporate fixed deposit. You should invest in a company who has been in the business for at least a decade. This is to ensure that your money is in safe hands.
  • Profit making status of the corporate: Make sure you invest in FDs of companies that have been making good profits and have been paying constant dividends for at least last seven years.
  • The credit rating of corporate FDs: The most important factor to be considered when selecting a fixed deposit is its credit rating. Credit rating agencies like CRISIL and ICRA provide accreditation to NBFCs that offer company FDs. The better the rating is, the safer is your investment. You might be offered a high interest rate by a company whose FD is low rated. However, there is considerable risk involved in such a case. Hence, you must only invest in company FDs having a rating of AAA or AA. For instance, it is safe to invest in Bajaj Finance Fixed Deposit as it has been rated FAAA/stable by CRISIL and MAAA/Stable by ICRA Rating– one of the highest credit ratings to any NBFC in the industry.
  • Financial statement of the company: For a better understanding of the company’s performance, you will need to go through its financial statement. A financial statement can give insights into the current operation of the company and could also tell you about its future prospects.
  • Choice of the sector: Choose the sector carefully when you invest. There are sectors which will always be volatile, and there will be other sectors which will be less risky. If you want to make your investment less risky, then you should avoid the former and invest only in those which have a lower risk. E.g., real estate and microfinance are risky and troubled sectors.
  • Beware of high return offers: There will be cases when there will be an offer of a very high interest rate among corporate fixed deposits. You should do your own analysis before investing in those schemes as along with the high return, they also come with high-risk.
  • Analyze the history of how the return is paid: It is also important to check how the company has paid its investors historically. If there’s a good track record, it will be ideal for you to invest in its FD.
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Earn higher returns by investing in a corporate fixed deposit

Among all other corporate FDs available, Bajaj Finance Fixed Deposit stands out due to its high interest rates and credibility. It is one of the very few company FDs offering both the benefits- high interest along with the safety of your capital.  You can also avail additional benefits like-

  • Flexible Tenor –You can invest for a minimum of 12 months and maximum for 60 months. Such flexibility helps you ladder your investments.
  • Periodic payout options- You can avail periodic interest payouts in case of non-cumulative Bajaj Finance FDs. The frequency of payouts can be set to monthly, quarterly or half-yearly, depending on your requirements.

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