Updated: June 17, 2018, 7:49 AM IST
Where will you get the most profit
>> Bajaj Finance, with an AAA rating, was offering 7.85 per cent interest on three-year FDs till April 2018. It was increased to 8.1 percent in May 2018 and 8.4 percent on 5 June.
>> AAA-rated DHFL was also paying 7.85 per cent earlier on three-year deposits till March 2018, which it increased to 7.9 per cent in April and 8.45 per cent on 8 June.>> This means that interest rates on corporate FDs have increased by 0.60 percent in the first quarter of this financial year.
>> Other companies like Mahindra Finance, Shriram Transport Finance and HDFC Ltd have also increased FD rates in the last few months.
Remember these things
Gajendra Kothari of Attica Wealth recommends that before investing in corporate FDs, make sure to check the credit rating of private companies and invest only in companies with AAA rating. In corporate FD, also keep in mind that the pay-out option of each company is different. Sometimes, there are problems like check bounce.
Here you will get the highest profit by getting FD
What is Fixed Deposit (FD)
First of all, we need to know what is Fixed Deposit (FD). In general terms, when a person fixes or deposits a certain amount of money in a bank for a certain time, we call it FD. Generally, the bank pays you more interest than the money deposited in your savings account and current account.
What is a corporate FD
Companies work to raise capital for their needs. Companies take this capital from the investor for a certain period, which is called corporate FD. For this, she asks the investor to invest through advertisement. Generally, on this FD, companies pay more interest than banks and other finance companies to attract investors, as these companies have the right to collect deposits under company law. Since companies have high interest rates on corporate FDs, it is better to invest in them.
Period of Corporate FD
Normally the maturity period of deposits that companies take under corporate FD varies from six months to 36 months. Because no company can take a deposit under corporate FD of less and longer duration. Along with this, it is necessary for the company to have a turnover of up to a minimum net worth of Rs 100 crore or Rs 500 crore for taking deposits.
See the company's 10-20 year record for investing in corporate deposits. Make deposits only in companies with profits. Invest in dividend paying companies for 5 years. Check the credit rating of the company before investing. The better the rating, the lower the risk. Invest only in companies with AAA or AA rating. Avoid companies associated with high risk sectors. HDFC gets 7.4 percent interest, Home Finance 7.5 percent interest, Hudco 7 percent interest and Shriram City Union Finance 8 percent corporate interest.
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First published: June 17, 2018, 7:16 AM IST