Bank FD Or Company FD
Fixed deposit means investing a particular amount for a fixed period of time. Both short term and long term goals can be achieved by fixed deposits. Higher rate of interests are offered in fixed deposit schemes. It is the oldest form investment method. Fixed deposits allow you to deposit a fixed amount for 15 days to 5 years. The Reserve Bank of India has been increasing the key rates without intervals. This is beneficial for the fixed depositors of the country, because they will get more interest than before. Banks and non banking financial institutions are aggressively trying to capture customers.
Fixed deposits give an average interest rate of 10% in India. Loan facility is available in fixed deposit schemes. Customers can get loan of 85% of the deposit amount. It is low risk investment tool for the people. Company fixed deposits are not considered as safe like bank fixed deposits. If a company is going to losses, the amount invested can be lost. They are offering more interest than banks. The stock markets and IPOs are bleeding in these days, so the investors are now seeking good fixed deposit schemes.
There are about 100 companies offering FD schemes currently. Majority of them are offering more interest than bank FDs. 3 year FD from Mahindra Finance Offers 10.55% interest where Jaiprakash Associates offers 12.5%. Bank deposits are guaranteed by the deposit Insurance and Credit Guarantee Corporation which assures repayment of Rs 1 Lakhs. There is no such guarantee in company fixed deposits, so you should be very careful when selecting company FD for investment. You have to study the track record and past performance of the company. The ratings of the FD must be checked before Investment. Select the companies which have the rating of AAA or AA. Selection is the right challenge.
The real estate companies are running with high debts. Please avoid those companies when depositing. If a company offers comparatively high interest rate, please check why they are offering that? Some companies may be starving for money, so they are offering comparatively high interest rates. If you satisfied on such situations, you can select it. Emergency money should not be invested in the company FDs. In bank FD, you can take your money at emergency with some simple penalties. In company FD, it is not possible. Interest income from both Bank FD and Company FD are taxable.