Corporate Fixed Deposits

What is a Corporate FD or Company FD?

A corporate FD is a deposit accepted by eligible NBFCs, housing finance companies, manufacturing enterprises, and other corporates that meet the regulatory requirements. Tenures typically range from 12 to 60 months, depending on the issuer.

Investors receive their principal and interest either at maturity or as periodic payouts, depending on the payout option chosen. Corporate FDs are popular among investors seeking fixed income that is generally higher than bank fixed deposits, though they carry credit risk tied to the financial strength of the issuing company.

Corporate FD Interest Rates in India

Corporate FD interest rates vary across issuers based on tenure, credit rating, and prevailing market conditions.

Corporate FD Rates in India

The table below covers corporate FD rates for retail deposit slabs (upper limits vary by issuer, for example ₹3 crore for Bajaj Finance and up to ₹5–10 crore for some issuers):

*Cumulative FD Interest Rates as on June 2026. These are indicative and subject to revision by the issuing company. **Senior citizens receive an additional 0.25%–0.50% p.a. depending on the issuer.

Corporate FD Rates Comparison by Tenure

The table below compares rates by tenure for select corporate FDs on deposits up to ₹5 crore (₹10 crore for some institutions):

*Cumulative FD Interest Rates as on June 2026. These are indicative and subject to revision by the issuing company.

Types of Corporate Fixed Deposits

Corporate FDs are broadly classified by how interest is paid to investors.

Cumulative Corporate FD

A cumulative corporate FD does not pay periodic interest during the tenure. Interest is compounded and added to the principal, and the full maturity amount is paid at the end of the term. This suits investors focused on long-term wealth accumulation who do not need periodic income from their investments.

Non-Cumulative Corporate FD

Non-cumulative corporate FD pays interest at regular periods such as monthly, quarterly, half-yearly or annually. The interest is paid during the tenure and the principal amount is paid upon maturity. This option is suitable for those investors who seek a steady income stream, such as retirees or those who are income focused.

How Corporate FDs Work

When you invest in a corporate FD, you deposit a fixed amount with a company and earn interest at a predetermined rate. The process typically works as follows:

• Deposit Money: The investor chooses the company, amount of investment, tenure and the choice of interest payout they prefer, before depositing the money.
• Company Accepts the Deposit: After the KYC process is complete and the application is verified, the company accepts the deposit and issues an FD receipt or deposit certificate.
• Interest Accrual: Interest can be calculated from the date of deposit and should be payable on monthly, quarterly, half yearly, annual or on the date of maturity basis as per the decision.
• Maturity: At maturity, the corporation repays the principal and interest in accordance with the payout option specified.
• Renewal or Closure: The investor has an option to either encash the maturity sum or renew the corporate FD for further duration at the time of maturity. Some companies also allow investors to change the interest payout option at the time of renewal.

Are Corporate FDs Safe?

Their safety rests entirely on the issuing company's ability to repay the deposit. Investors should evaluate the company's credit rating and financial position before investing.

Understanding Corporate FD Credit Ratings

Credit ratings indicate the issuer's ability to meet its repayment obligations. Higher-rated corporate FDs generally carry lower credit risk.

Common investment-grade ratings include:

• AAA: Highest degree of safety.
• AA: High degree of safety.
• A: Adequate degree of safety; somewhat higher risk than AA/AAA.
• BBB and below: More credit risk; needs a comprehensive evaluation.

Credit ratings are a useful reference but they are not a guarantee of repayment and are subject to revision.

How to Evaluate a Company Before Investing

Before investing in a Corporate FD, consider the following:

• Check the latest credit rating.
• Review the company's financial performance and debt levels.
• Assess its repayment track record.
• Compare the interest rate with the company's credit profile.
• Read the FD terms, including tenure and premature withdrawal conditions.

Risks Associated With Corporate FDs

Corporate FDs involve the following risks:

• Credit Risk: The issuer may delay or default on repayments.
• Liquidity Risk: Corporate FD premature withdrawal may be restricted or attract penalties.
• Interest Rate Risk: Rising market rates can make existing FDs less attractive.
• Credit Rating Downgrade: A lower rating may indicate increased repayment risk.
• No Deposit Insurance: Corporate FDs are not covered under the DICGC scheme.

Benefits of Investing in Corporate FDs

Corporate fixed deposits offer stable returns and can form part of a diversified investment portfolio. Here are some of their key benefits.

• Higher Interest Rates than Bank Fixed Deposits: Corporate fixed deposits normally provide higher interest rates than bank fixed deposits. This allows investors to invest in an instrument of fixed income and yet get possibly larger returns.
• Flexible Interest Payout Options: Investors can choose the interest payout according to their financial needs. The frequency of interest payment may be monthly, quarterly, half yearly, annually or at maturity and is determined by the issuer.
• Many Tenure Options: Most corporate FDs come with many tenures, starting from a few months to several years. This flexibility is enabled for all those investors who want to choose a period that matches their financial goals and liquidity requirements.
• For the Conservative Investor: If you are a conservative investor looking for somewhat predictable profits, then corporate FDs may be right for you if you are investing in deposits of financially strong firms with good credit ratings. Corporate FDs are not risk free hence it is important to evaluate the credit quality of the issuer.

Corporate FD vs Bank FD

The following table explores the key differences between Corporate FD vs Bank FD to help investors.

Who Should Invest in Corporate FDs?

Corporate FDs may suit investors who are comfortable accepting some credit risk in exchange for higher returns than bank FDs.

• Retirees Seeking Regular Income: If you are a retiree and looking for a regular income then non-cumulative corporate FDs can be a solution. The interest payment options are usually monthly, quarterly, semi-annually or annually depending on the issuer.
• Conservative Investors: Conservative investors may consider investing in highly rated corporate FDs after assessing the issuer's credit rating, financial strength, and associated risks. Since corporate FDs are not covered by DICGC deposit insurance, evaluating the issuer's creditworthiness is important.
• Investors Seeking Higher Returns: Investors with some risk appetite can consider corporate FDs for higher interest rates compared to bank FDs, after carefully assessing the issuer's creditworthiness.
• Medium Term Investors: Investors who wish to reach their medium term financial objectives like higher education, renovation of house, expansion of business or purchase of vehicle in near future can opt for corporate FDs as per their investment tenure and financial objectives.

Cumulative vs Non-Cumulative Corporate FD

Corporate FDs offer two payout options: cumulative and non-cumulative. The right choice depends on whether you want your interest to compound over the tenure or receive it at regular intervals.

RBI Rules for NBFC Deposits

The Reserve Bank of India regulates public deposits accepted by eligible deposit-accepting NBFCs under the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, as amended. These regulations ensure financial discipline, transparency, and investor protection.

• RBI Rules on Corporate FD’s: Only NBFCs approved by RBI are permitted to take public deposits. They have to follow deposit taking, credit ratings, disclosures, liquidity and regulatory reporting norms set down by RBI. Companies accepting deposits under the Companies Act, 2013 must comply with the applicable provisions of that Act.
• Deposit Limits and Compliance Requirements: NBFCs eligible for the scheme must comply with the RBI’s deposit limits, keep liquid assets as prescribed, get credit rating as prescribed, issue deposit receipts and publish key information about their deposits and financial state.
• Investor Protection Measures: Check the company’s latest credit rating and thoroughly review the deposit terms before you invest. Investors need to check the financial strength of the issuer, as corporate FDs are not covered under DICGC deposit insurance.

Taxation of Corporate Fixed Deposits

Interest income from corporate FDs is taxable under the Income Tax Act. The tax liability depends on your total taxable income, applicable tax slab, residential status, and whether the company has deducted TDS. Understanding these provisions helps you estimate the actual after-tax return on your investment.

How Corporate FD Interest is Taxed

Interest on a corporate fixed deposit is taxable under the “Income from Other Sources”. It is added to total taxable income and taxed as per the applicable income tax slab.

• Interest on non-cumulative corporate FDs is taxable in the year of receipt.
• Interest earned on cumulative corporate FDs is usually taxable in each financial year on an accrual basis, even if paid only on maturity.

Corporate FDs are not tax-saving fixed deposits and do not qualify for deduction under Section 80C.

TDS on Corporate FDs

Companies deduct TDS under Section 194A of the Income Tax Act, 1961 if the aggregate interest paid to a resident depositor exceeds ₹10,000 in a financial year.

• TDS rate 10% if a valid PAN is furnished.
• Without PAN TDS is deducted at 20% under the applicable provisions of the Income-tax Act.
• TDS is deducted only when the prescribed threshold is exceeded.
• Even if TDS is deducted, you have to declare the entire interest income while completing your Income Tax Return (ITR). If TDS deducted is less than real tax liability, you have to pay balance tax. If you have paid more TDS than needed, you can claim the refund while filing your ITR.

Form 15G and Form 15H for Corporate FDs

Where the conditions are met, resident investors eligible for exemption can submit Form 15G or Form 15H to avoid TDS on corporate FD interest.

• Form 15G: For resident individuals below 60 years of age and certain other eligible persons whose estimated tax liability for the financial year is nil.
• Form 15H: For resident senior citizens (60 years or above) whose estimated tax liability for the financial year is nil.

Submitting Form 15G or Form 15H only prevents the deduction of TDS where eligible. It does not exempt the interest income from tax. If the interest is taxable, it must still be disclosed while filing the Income Tax Return.

How to Open a Corporate FD

Most companies allow investors to open a corporate FD through online and offline modes. Check for credit rating, interest rates, and tenure deposit terms before investing in the company.

Online Application Process

A typical online application includes the following steps:

• Select Company: Before investing, compare the company’s credit rating, interest rates, duration and deposit characteristics.
• Visit the Official Website: Go to the company's official website and select the corporate FD or public deposit option.
• Form Fill up: Fill up personal details, investment amount, tenure, bank account details and nominee details.
• KYC verification completed: Submit PAN and identification and residence proofs as per the applicable KYC process.
• Pay Instantly: Pay the investment money by net banking, UPI, NEFT, RTGS or any other valid mode of payment.
• Get the Deposit Confirmation: The company, after verification, issues a deposit receipt or deposit certificate as confirmation of the investment.

Offline Application Process

Can also be applied through the company’s branch or licensed distributor.

• Collect the Application Form: You can also get the corporate FD application form from the branch or the authorised representative.
• Fill up the Application Form: Provide your personal details, investment details, bank account and nominee details.
• Submit Documents: Provide self-attested copies of PAN and proof of identity and address.
• Make Payment: Payment may be paid by cheque, bank draft or any other method of payment approved by the company.
• Submit Application: Submit the completed application form and the required documents.
• Collect the Deposit Receipt: If the application is granted, the company will provide a deposit receipt or deposit certificate.

Documents and KYC Requirements

The precise requirements may vary depending on the issuing company and the type of investor.

Note: The documentation required may vary depending on the issuer company, mode of application (online or offline), and type of investor.

Renewal and Nomination Process

Most companies allow investors to renew their corporate FD at maturity and nominate a beneficiary. This may depend on the deposit plan of the issuer.

Corporate FD Renewal Process

The investors can renew their corporate FD before the date of maturity by following the below steps:

• Review Maturity Information: Review the maturity date and available renewal options.
• Select the Renewal Option: Choose whether to renew the deposit for a further term or to collect the maturity proceeds.
• Information Request: Request for guidelines on how to renew online/offline if required.
• Interest Rate: The renewed FD may involve the rate of interest prevailing.
• Confirmation: A new deposit receipt or deposit certificate can be issued by the company upon successful renewal.

Note: According to the deposit system, several companies are paying bonuses or high rates of interest at the time of renewal.

Corporate FD Nomination Process

A nomination enables the nominee to claim the deposit proceeds in the event of the depositor's death.

• Add a Nominee: Usually, a nomination can be done either at the time of opening corporate FD or throughout the lifetime of the deposit.
• Update Nomination: The nomination can be changed or cancelled by the investors by submitting the request as stipulated.
• Claim Process: The nominee may claim the deposit by submitting the prescribed documents, such as the claim form, death certificate, and proof of identity.
• Keep Details Updated: The investors may update the nominee details at regular intervals during the period of deposit.

Premature Withdrawal and Closure Rules

Most corporate FDs permit premature withdrawal subject to the issuing company's terms and applicable regulatory requirements.

Premature Withdrawal Rules

Investors should understand the lock-in time, penalties and interest rate applicable on premature closure, before engaging in the deposit scheme.

• Premature withdrawal is permitted in accordance with the issuer's deposit scheme and applicable regulations.
• In respect of deposit taking NBFCs, early repayment of a public deposit is not ordinarily permitted within three months from the date of receipt, save in situations permitted under RBI guidelines.
• The issuer’s policy also allows investors to request early withdrawal following the respective lock in period.
• Under the deposit plan, the corporation may pay interest at a reduced rate or make a deduction for early withdrawal charges.
• The size of the payment on early closure is determined by the period for which the deposit has been held by the company and the relevant terms and conditions.

Corporate FD Closure Process

Investors who wish to close a corporate FD before maturity generally need to:

• Submit a premature withdrawal request in the prescribed format.
• Provide a deposit receipt or deposit certificate wherever required.
• Fill out any KYC or identification verification that the company requires from you.
• Get the qualified principal amount and appropriate interest after adjustment of any penalty or decreased interest as per the issuer’s deposit program.

Note: Please note that the premature withdrawal restrictions, lock-in time, penalties, and the way interest is calculated may differ for different corporate FD issuers. Investors should examine the deposit scheme carefully before investing.

Things to Consider Before Closing a Corporate FD

Closing a corporate fixed deposit before maturity may reduce your overall returns. If you choose to close early, please consider the following:

• Lock-in Period: Some corporate FDs especially offered by deposit accepting NBFCs may have a lock-in period for early withdrawal. Always check the issuer’s deposit plan before proceeding.
• Understand the Terms for Early Withdrawal: Each issuer has various early close limits. Check eligibility, criteria and fines before you apply for any.
• Interest Payable Review: Interest may be payable at a reduced rate or a penalty may be charged on early closure which might affect overall returns.
• Payment: If cumulative FDs are closed before the maturity date the estimated maturity value may decrease. The FD guidelines say interest is only paid for the tenure of the FD.
• See Benefits of Renewal: Close early you could lose any special renewal rates or benefits you may have at maturity.
• Examine the Tax Consequences: Interest accumulated upto date of closure is taxable under the provisions of the Income-Tax Act, 1961 and TDS (if applicable) may be taken into account at the time of filing ITR.
• Read the Deposit Scheme Carefully: Rules, penalties and settlement terms differ by issuer, so always check the deposit scheme’s official terms before going for premature withdrawal.

Key Takeaways

Corporate FD interest rates range from 6.60% to 8.95% p.a. and are generally higher than bank fixed deposits. However, they carry higher credit risk and are not covered under DICGC deposit insurance. Before investing, compare credit ratings, financial strength, tenure, payout options, and premature withdrawal terms across issuers.