Purab Chib recently moved to a metro city from a small town in Jammu. He was struggling for a better lifestyle and to that end, he wanted to start afresh. He had invested all his life savings in a fixed deposits (FDs). He closed all his FDs when he came to the metro. Thus, he wanted to open FDs when he moved to the metro. He asked his colleagues to suggest a good bank for opening the FDs. One of his colleagues advised him to open a company FD instead of Bank FD.

Purab was unaware that certain companies also offer FDs. On doing further research, he realized that various Financial Institutions (FIs) and Non-Banking Financial Companies (NBFCs) offered FD options.

Let’s take a peek at 5 reasons why you must opt for a company FD:


Company FDs offer higher returns than banks. The interest rate offered by FIs/NBFCs is usually a percent or two higher than banks. Many FIs and NBFCs offer additional interest to their employees, existing loan customers and senior citizens. You can also be entitled to special interest rates if you make heavy deposits in company FD accounts. Usually, deposits of more than Rs.5 crore are eligible for such special rates. Finally, several FIs/NBFCs allow you to choose your interest scheme. You can choose to receive a cumulative interest. Alternatively, you can also opt for periodic interest payments (Non-cumulative).


Banks are perceived to be comparatively safer in terms of repayments. However, this does not make FIs/NBFCs undesirable. You must check the institution’s credibility before investing in their FDs. There are several FIs/NBFCs that offer high security to your investment. The FIs and NBFCs are accredited ratings by Investment Information and Credit Rating Agency (ICRA) and Credit Rating Information Services of India Limited (CRISIL). Such ratings can help you feel safer and more stable when investing with a higher rated FIs/NBFCs.


The interest income that you earn on FDs is fully taxable. Banks and FIs/NBFCs deduct tax at source (TDS) only if your interest income exceeds Rs. 10,000 and Rs.5,000 per annum, respectively. If you do not have a taxable income, you must inform the bank/FI/NBFC. You need to submit certain forms to ensure that they do not deduct TDS on your interest income. The tenor of your FD also helps you save tax. You can avoid paying tax on the principal amount up to Rs.1.5 lakh if you open an FD for 5 years.

Flexible tenor

Flexibility is one of the reasons why you must opt for a company FD. FIs/NBFS offer flexibility in terms of interest schemes, document requirements and so on. They also have flexible tenor. Most of them offer a tenor that ranges from 12 to 60 months. Also, you can open more than one FD. Thus, you can have different FDs of different tenor as per your needs and goals.

Online services

To open a company FD account, you can apply on their websites in just a few clicks. They then send their officials to collect your documents. You can also get interest-related and other information online. Most FIs/NBFCs have an online customer portal to assist you. For any queries, you can log in there. You can even use their online FD calculators to determine your maturity amount.

Other facilities

Many FIs/NBFCs offer several other services and facilities. You can use their online FD calculators to determine your maturity amount. You can check how a change in the tenor or deposit amount changes the interest receivable. In the case of emergency, you can borrow up to 90% of your company FD amount. This can be done with nominal or nil processing fees. You can also withdraw before the end of the tenor. However, you will have to pay a penalty for the same.

The bottom line

You can get better returns on your savings by investing in company FDs. You are also entitled to several offers and benefits when you open a company FD.

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