subrasinvestments

  • Fixed Deposit
  • FD Calculator
  • FAQ

A fixed deposit (FD) is a financial instrument provided by banks and companies which provides investors with a higher rate of interest than a regular savings account, until the given maturity date.

Company fixed deposits usually offer higher rate of interest than banks but are unsecured. However, our research desk ensures that all company deposits on offer have a high credit rating which minimizes any kind of credit risk. Company deposits are governed by the Companies Act under Section 58A.

Learn about the process to invest in Fixed Deposits through Subras Invetments.

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The documents required for various companies are as follows:

The renewal process of a FD is similar to purchasing a new FD.

You need to submit:

  1. Renewal form (same as purchase form but renewal option has to be selected)
  2. FD certificate with your signature on the backside to renew it
  3. Any extra document required by the company

Credit rating implies the evaluation of the creditworthiness of a company, predicting its ability to pay back the debt. The meanings of rating scales of various agencies are:

 CRISILICRACAREBRICKWORKSFITCH
Highest SafetyCRISIL FAAAICRA MAAACARE AAABWR FAAAAAA
High SafetyCRISIL FAAICRA MAACARE AABWR FAAAA
Adequate SafetyCRISIL FAICRA MACARE ABWR FAA
Moderate Safety--CARE BBBBWR FBBBBBB
Moderate Risk--CARE BBBWR FBBBB
High RiskCRISIL FBICRA MBCARE BBWR FBB
Substantial Risk----CCC
Very High Risk----CC
Exceptionally High RiskCRISIL FCICRA MCCARE CBWR FCC
Restricted Default----RD
DefaultCRISIL FDICRA MDCARE DBWR FDD
  • Interest Rates: Corporate FDs usually offer a higher rate of return v/s Bank FDs.
  • Security & Rating: Bank FDs don’t have ratings to distinguish riskiness but a sum upto Rs 1 Lac is insured by RBI against insolvency of the bank. In case of corporate deposits, its financials and ratings for fixed deposits should be looked into before making a deposit in them.

Interest on Corporate FDs is paid monthly/quarterly/half yearly/yearly / on maturity depending on the scheme selected. Interest will be paid to the investor’s registered bank account at intervals as selected by the customer.

Tax Deducted at Source (TDS) is deducted if the interest earned on a corporate fixed deposit exceeds Rs. 5,000 in a financial year. If total income from all sources is under permissible non-taxable income levels then, individuals below 60 years should file form 15G and individuals above 60 years should file form 15H. However, individuals whose income from other sources exceeds INR 1 lakh cannot file a 15G form. If no form is filed and the income from Corporate FDs is more than Rs. 5,000 then the corporate will deduct a 10% plus 3% education cess, therefore a total 10.3% of the interest earned.

Yes, corporate FDs can be pre-matured, but usually most of them levy a penalty for the same. However, we request you to look at individual company offer documents for the terms of pre-maturing their deposits as this may vary.

Yes, there are special categories which enable investors to get higher interest rates. Senior citizens in most cases are given a higher rate of return in most corporate FDs. Some companies offer a higher rate of return to women, widows, armed force personnel, its employees, and its various customers (Home Loan/ SME Loan/ Mortgage Loan). Please check the various offerings by different companies and their special categories before finalizing your FD purchase.

No, interest rate changes by RBI will not have any impact on your current FD returns as they are locked in for a specific period.