Definition
Corporate FD
A corporate fixed deposit is a deposit with a company or NBFC offering a fixed interest rate, usually higher than bank FDs, but without bank-style deposit insurance.
A corporate FD is a term deposit issued by a company or NBFC. To attract funds it typically offers higher interest rates than bank FDs, with various tenures and payout options.
The trade-off is higher risk: corporate FDs are not covered by the bank deposit insurance (DICGC) that protects bank deposits up to a limit, so repayment depends entirely on the issuer's financial health. Credit ratings from agencies help gauge safety — higher-rated FDs are generally safer.
Interest is fully taxable at your slab rate. Corporate FDs can boost fixed-income returns but should be chosen carefully based on credit rating, issuer reputation and diversification.
Related terms
- P2P LendingPeer-to-peer lending is an RBI-regulated model where individuals lend directly to other individuals through an NBFC-P2P platform, which matches lenders and borrowers.
- Bond Investing PlatformsBond investing platforms are SEBI-regulated online avenues, including Online Bond Platform Providers, that let retail investors buy listed corporate and government bonds in small lots.
- NCD Public IssueA Non-Convertible Debenture public issue is a company's offer of debt securities to the public that pay fixed interest and return principal at maturity, without converting into shares.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.