Company Fixed Deposits in India
Apart from banks and government entities there are some private companies which, every now and then, come up with company fixed deposit schemes in India. These are just like the regular fixed deposit you get in banks but the only difference being they are being offered by private companies and are entirely managed by themselves and no government body or entity or even banks have any hand on them on how they operate and how they are paying out to customers and even what interest rates they are offering, etc.
These private and company fixed deposits in India used to be very popular till some years back where people had not much knowledge about the stock markets and mutual funds, etc. But soon the loyalty switched to mutual funds and stock markets and this was further fueled when there were instances of non payment of funds back to the investors and non-payment of interests, etc., by some of the few companies earlier. And company fixed deposits were again revived couple of years back when the Indian stock markets took a tumble.
Advantages of Company Fixed Deposits:
- High interest rates.
- No income tax on interest if the interest income is less than Rs. 5000 in a year.
- Flexibility in term of deposits.
- Relatively safer than stock markets.
- Assured returns until and unless the company defrauds or goes bankrupt.
Which Companies Offer Private Fixed Deposits:
- Finance companies
- Manufacturing companies
- Government companies
- Housing finance companies, etc.
Finding the best Company Fixed Deposits:
What to look for when buying a company fixed deposit can really be a tough task to ask for. But first thing to look for is the creditability of the company and whether they are indeed a reputed and genuine company which has a previous credentials of operating Company FDs and how well they have paid out the amount back to the investors.
Secondly look for the ratings offered by various credit rating companies like CRISIL and if it is highly rated by them, then you can no doubt invest your hard earned money on them.
Thirdly don’t always follow the herd when it comes to investing in company fixed deposits in India, as there have been very many instances where people were cheated to the tune of crores or rupees by the non-banking private finance companies where thousands of people flocked them with the sheer greed of gaining higher interests and they were all now left in lurch with no interest and with even losing their capital with many such private finance companies.
Precautions:
You should never ever invest in a company which is offering very high interest rates which is way much higher than the average market interest rates. Research whether the said companies have defaulted on dividends to its share holders previously or not. If you have found that a particular company is running losses, never invest. And finally if a particular private company has a poor rating from the credit rating companies, just avoid them.
Final Note:
Since RBI or any other government agencies don’t really have any hold on such company fixed deposits, it is left with us to decide on which one to choose and which to avoid based on various research and analysis we make. After it is our hard earned money that is left in the wild for them to take it and runaway. If you are still very skeptical about these company fixed deposit schemes then just stay away from them, instead opt for the bank fixed deposits or government run fixed deposits, although the interest may be less, at least our capital will be safeguarded there!
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