Corporate FD

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Company Fixed Deposit

Company Fixed Deposits or Corporate Fixed Deposits work on the same investment principal as FDs. The difference is that your money is lent to a company instead of a bank, and you may also earn a slightly higher rate of interest than banks. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A.

Corporate entities require funds for various business purposes. They may seek funds from banks, equity investors, or from the public in the form of fixed deposits. The Reserve Bank of India allows companies to raise funds using corporate FDs. The interest rate varies depending on the enterprise and investment period. Usually, the interest rate is higher for longer durations.

There are two types of Fixed Deposits:

Cumulative Fixed Deposit Scheme

For cumulative FDs, the interest is accumulated over the tenor and paid at the time of maturity.

Non Cumulative Fixed Deposit Scheme

For non-cumulative FD schemes, you invest a sum for a specified tenor and receive the interest periodically. You get to choose the payout and that can be monthly, quarterly, half-yearly, or yearly. The choice between the two depends on your financial goals.

Who can Apply?
1)Residential Individuals
2)Trust* & Foundation-Under U/S 11(5) of Income Tax Act, a charitable trust.
3)Unincorporated Association or Body of Individuals.
4)Company/Partnership/HUF

Benefits of Corporate Fixed Deposit


  • No tax to be deducted at source on interest income upto Rs.5000 per financial year.
  • Loan facility up to 75% of deposit available from all branches of PNB Housing.
  • Premature cancellation allowed after 3 months on the discretion of the company.
  • The non-resident Indians (NRIs) can also enjoy the Fixe Deposit services on their NRE, NRO and FCNR Deposits. It is the best solution for those who want to hold some earnings in India.
  • These FD accounts can be liquidated easily depending on the terms of the institution.
  • If you are exempt from paying tax, you need to present Form 15H when you open a Fixed Deposit and subsequently at the beginning of the following financial year.
  • Obtain a loan against the bank FD (particularly when you do not have a credit history.
  • The FD Rate for Senior Citizens is higher than this and with added benefits for renewal.

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