A variant of individual deposit is company deposit scheme. Manufacturing companies offer it, NBFCs and other corporate firms. They offer a fixed return on investment over a specified period.
Types of company fixed deposit schemes:
Cumulative – interest is calculated annually and can be withdrawn at the time of maturity. If this interest exceeds Rs. 10,000 it will fall under the taxable bracket.
Non-cumulative – it compounds interest on a monthly, quarterly, half-yearly and annual basis and has similar payout options. It is good for individuals in need of regular interest income.
Features & Benefits of Company Deposit
Higher rate of interest – Most NBFCs offer higher interest rate of 8.40% which can go as high as 8.75%. Interest income of Rs. 10,000 or above can be made non-taxable on providing Form 15G and Form 15H. Top-up interest can be earned on meeting certain conditions like when you renew your deposit or if you are a senior citizen. Check with your Relationship Manager to learn more.
Low-risk investment – fixed deposit is free from market fluctuations and therefore offers assured returns. They are certified by ICRA’s MAAA (stable) rating and CRISIL’s FAAA/Stable rating.
Flexible Tenors – you can choose flexible tenor between 12-60 months. This positively impacts your liquidity needs and lets you accumulate wealth eventually.
Regulating bodies – fixed deposit is regulated by RBI as per the Banking Regulation Act of 1947, corporate deposits are regulated as per the Section 58A of the Companies Act of 1956. While, as per Companies Act, if the corporate entity gets dissolved, it should focus on paying off fixed deposit holders to minimize the loss of their investors.