Corporate FDs offer 0.50-1.50% higher interest than bank FDs. Understand the risks, compare rates, and learn how credit ratings protect your investment.
Corporate Fixed Deposits (also called Company FDs) are term deposits offered by Non-Banking Financial Companies (NBFCs) and corporates directly to the public. Unlike bank FDs, corporate FDs are not bank deposits — they are debt instruments issued by companies to raise funds from individual investors at interest rates typically 0.50% to 1.50% higher than bank FD rates.
Popular corporate FD issuers include Bajaj Finance, Shriram Finance, Mahindra Finance, PNB Housing, HDFC Ltd (now merged with HDFC Bank), and Sundaram Finance. These are regulated by the Reserve Bank of India (for NBFCs) and SEBI (for non-NBFC companies accepting public deposits).
| Feature | Bank FD | Corporate FD |
|---|---|---|
| Issuer | Commercial banks (SBI, HDFC, ICICI) | NBFCs & corporates (Bajaj Finance, Shriram) |
| Interest Rate | 6.50-7.25% (general) | 7.40-8.50% (general) |
| DICGC Insurance | Yes — up to Rs 5 lakh per depositor | No — not covered by DICGC |
| Safety | Very high (RBI regulated + DICGC) | Moderate to high (credit rating dependent) |
| Regulator | RBI | RBI (NBFCs) / SEBI (companies) |
| Minimum Deposit | Rs 1,000 - Rs 10,000 | Rs 15,000 - Rs 25,000 |
| Tenure | 7 days to 10 years | 12 months to 5 years (typically) |
| Premature Withdrawal | Allowed with small penalty | Restrictions may apply; longer lock-in common |
| Tax Saving (80C) | 5-year tax-saving FD available | 5-year option available at select NBFCs |
| Loan Against FD | Easily available (up to 90%) | May or may not be available |
Here are the highest corporate FD interest rates currently available from reputable issuers with strong credit ratings:
| Company | Rating | General Rate | Senior Rate | Min Deposit | Tenure |
|---|---|---|---|---|---|
| Bajaj Finance | CRISIL AAA / ICRA AAA | 7.40% | 7.65% | Rs 15,000 | 12-60 months |
| Shriram Finance | CRISIL AA+ / ICRA AA+ | 7.71% | 8.21% | Rs 5,000 | 12-60 months |
| Mahindra Finance | CRISIL AAA | 7.60% | 7.85% | Rs 5,000 | 12-60 months |
| PNB Housing Finance | CRISIL AA+ | 7.40% | 7.65% | Rs 10,000 | 12-60 months |
| Sundaram Finance | CRISIL AAA | 7.35% | 7.60% | Rs 10,000 | 12-36 months |
| HUDCO | CRISIL AAA (Govt) | 7.38% | 7.63% | Rs 10,000 | 12-60 months |
Note: Rates are indicative and change periodically. Always verify the latest rates on the company's website or through authorized agents before investing.
Credit rating is the single most important factor when choosing a corporate FD. It indicates the company's ability to repay your principal and interest on time. In India, credit ratings are issued by agencies like CRISIL, ICRA, CARE, and India Ratings.
| Rating | Safety Level | Meaning | Should You Invest? |
|---|---|---|---|
| AAA | Highest safety | Strongest capacity to repay, negligible default risk | Yes — safest corporate FDs |
| AA+ / AA | High safety | Very strong capacity, very low default risk | Yes — with reasonable caution |
| A+ / A | Adequate safety | Adequate capacity, but more vulnerable to economic changes | Only with careful assessment |
| BBB or below | Moderate to high risk | Moderate capacity, vulnerable to adverse conditions | Not recommended for retail investors |
Golden rule: Only invest in corporate FDs rated AA or above. AAA-rated corporate FDs from well-established companies like Bajaj Finance, Mahindra Finance, and Sundaram Finance have historically had zero default instances.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures bank deposits (including FDs) up to Rs 5 lakh per depositor per bank. This insurance covers your money even if the bank fails. However, corporate FDs are NOT covered by DICGC because they are not bank deposits — they are company borrowings.
This means if a company defaults on its FD obligations, you have no government insurance to fall back on. Your recovery would depend on the company's financial health, asset quality, and the legal resolution process. This is the primary reason corporate FDs offer higher interest rates — the extra return compensates for the additional risk.
Use our free FD calculator to see your exact maturity amount, interest earned, and year-wise growth schedule.
Calculate FD Returns →Corporate FDs rated AAA or AA+ from established NBFCs like Bajaj Finance, Mahindra Finance, and Sundaram Finance have historically been safe with zero defaults. However, they are not DICGC insured like bank FDs. The safety depends entirely on the company's financial health and credit rating. Always check the latest credit rating before investing.
Bajaj Finance FD is considered one of the safest corporate FDs with CRISIL AAA and ICRA AAA ratings — the highest possible. The company has never defaulted on its FD obligations. However, it is still a corporate FD and not covered by DICGC insurance. For amounts above Rs 5 lakh, many investors prefer Bajaj Finance FD for its higher rate compared to banks.
If a company defaults on its FD, your deposits are at risk. You would need to file a claim through the legal resolution process. Under the SARFAESI Act and IBC (Insolvency and Bankruptcy Code), FD holders are classified as unsecured creditors and may recover only a partial amount depending on the company's assets. This is why credit rating is crucial.
Yes, TDS rules for corporate FDs are the same as bank FDs — TDS is deducted at 10% when annual interest exceeds Rs 5,000 (note: for NBFC FDs, the threshold is Rs 5,000, not Rs 40,000 as with bank FDs). Submit Form 15G/15H if your total income is below the taxable limit. The lower threshold means TDS kicks in earlier with corporate FDs.
Some NBFCs like Bajaj Finance offer loans against their own FDs at 1-2% above the FD rate, similar to banks. However, this facility is not universally available across all corporate FD issuers. If loan-against-FD is important to you, verify availability before investing. Bank FDs generally offer more flexible and widely available loan facilities.