Corporate Fixed Deposits (FDs) are financial instruments offered by non-banking financial companies (NBFCs) or corporate entities to individuals and institutional investors. These fixed deposits function similarly to traditional bank fixed deposits but are not issued by banks.
Higher Interest Rates -Corporate FDs typically offer higher interest rates compared to traditional bank FDs. This can be appealing to investors looking for better returns on their fixed-income investments.
Diverse Tenure Options -Investors can choose the tenure for which they want to invest in corporate FDs. The flexibility in tenures allows investors to align their investments with their financial objectives and liquidity needs.
Fixed and Predictable Returns: -Corporate FDs provide fixed and predictable returns throughout the investment tenure. This can be advantageous for investors who prefer stability in their income streams.
Diversification - Corporate FDs offer investors the opportunity to diversify their fixed-income portfolio. By investing in FDs issued by different companies, investors can spread their risk and reduce the impact of default by a single issuer.
Higher Liquidity than Traditional FDs -While corporate FDs may have certain restrictions on premature withdrawal, some issuers provide more flexibility compared to traditional bank FDs. Investors should check the terms and conditions related to liquidity before making an investment.
Choice of Interest Payouts -Investors often have the option to choose the frequency of interest payouts, such as monthly, quarterly, or annually. This can be beneficial for those who rely on interest income for regular cash flow.