Fixed deposits (FDs) are one of the most popular risk-free investment instruments in India. People save their hard-earned money in FDs to save for a better financial future or to fund their goals. However, with the decreasing FD interest rates of banks, many people are compelled to search for alternate wealth-generation tools that can grow their wealth. Corporate fixed deposits can be a possible solution for such problems.
Let us first understand what a corporate FD is before learning about its plus points.
What is a corporate fixed deposit?
Like banks, many non-banking financial institutions and companies like Mahindra Finance take deposits from customers for a specified tenure in return for high-interest rates.
Advantages of opting for corporate FDs
Here are some benefits of investing in corporate FDs.
- Guaranteed returns
Just like your bank FDs, you can earn assured returns with corporate FDs as well. However, here the FD rates are comparatively more. For instance, if you want to deposit a sum of INR 2 lakh for one year and the interest rate offered by a financial institution is around 7% per year, you will earn INR 2.14 lakh once the duration ends. Moreover, you get an idea about the amount you will receive on maturity. An FD calculator can help you with this,
- Better interest rates for senior citizens
Senior citizens are offered a higher rate of interest compared to other investors. As these individuals are on the income received from FDs, they can earn returns from a corporate FD, making it a useful investment avenue for them.
- Facility to choose the investment duration
In the case of a corporate FD, you have the flexibility to opt for the investment duration as per your monetary aspirations. Mahindra Finance provides different fixed deposit options in tenure, ranging from one year to five years. So, you can select a period according to your financial objectives.
- Lower penalty period on early withdrawals
FDs have a minimum lock-in tenure of three months as per the prescribed guidelines of the Reserve Bank of India (RBI). Due to any reason, if you withdraw the funds from your FD before three months, you will have to pay the early withdrawal charges. Additionally, banks and non-banking financial companies can decide the penalty duration. The penalty tenure for corporate FDs is much lesser than bank FDs.
These promising features make corporate FDs a valuable investment option. Financial institutions like Mahindra Finance offer competitive fixed deposit interest rates. Log on to the company’s website to know more.