Planning to invest in corporate fixed deposits? Here’s all you need to know

6 min read | Updated on September 01, 2025, 18:13 IST

SUMMARY

Corporate fixed deposits (FDs) aren’t secured by any government authority, which makes them a risky instrument. Further, in most corporate FDs, premature withdrawal isn’t allowed, and even when it is, penalties are charged.

Corporate fixed deposits, best corporate FD rates

The extra 1-3% interest that corporate deposits offer comes with a higher risk as compared to bank deposits.

Corporate fixed deposits (FDs) are term deposits offered by Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs) and other corporate entities held for a fixed period of time at fixed interest rates. These FDs usually offer higher interest rates than traditional bank FDs, ranging between 1 to 2% higher than bank FDs.

However, these FDs aren’t insured by any government body like how RBI’s Deposit Insurance and Credit Guarantee Corporation (DICGC) insures bank deposits up to ₹5 lakh per depositor in case of bank failure. Instead, the safety of corporate FDs depends on their financial health and credit ratings.

Ratings

Corporations must get their deposits rated by agencies like CRISIL, ICRA or CARE. The ratings indicate the likelihood of timely repayment of principal and interest, basically depicting how safe the deposits are. The ratings are in the form of AAA or AA, for example:

AAA: The highest rating, indicating that the deposit is extremely safe and carries the lowest default risk.
AA/AA+: A strong rating, depicting high safety.
BBB: A lower rating signalling towards a higher risk of default when compared to AAA or AA-rated instruments.
D: This means that the instrument carries the highest risk, indicating that it is either in default or expected to be in default soon.

Corporate Fixed Deposit interest rates

Here are the top 10 high-paying corporate FDs and their interest rates:

Company	CRISIL/ICRA Rating	Maximum FD Rate (p.a.)
Bajaj Finance	CRISIL FAAA/Stable, ICRA MAA/Stable	Up to 6.95%
Mahindra Finance Ltd FD	CRISIL FAAA	7.35% – 7.45%
Shriram Transport Finance Ltd FD	ICRA MAA+	7.65% – 8.40%
PNB Housing Finance Ltd FD	CRISIL FAAA	Up to 8.71%
LIC Housing Finance Ltd FD	CRISIL FAAA	7.00% – 7.35%
HDFC Ltd FD	ICRA MAAA	Up to 6.45%
Housing & Urban Development Corp (HUDCO) FD	ICRA AAA	Up to 10.50%
Sundaram Finance Company FD	CRISIL FAAA	6.97% – 7.50%
Muthoot Capital FD	CRISIL FAAA	7.90% – 8.95%

Source: BankBazaar.com

Risks of corporate FDs

There are many risks attached to corporate FDs. They aren’t secured by any government authority, and if a company faces any financial constraints or trouble, repayment of principal and interest might be delayed, or in worst cases, lost. Further, in most corporate FDs, premature withdrawal isn’t allowed. Even when it is, penalties are charged.

It’s also important to note that if any credit rating agency lowers the rating of a company or its financial instruments (like bonds, deposits), it may become riskier to invest in it.

Bank FDs vs Corporate FDs

Traditional bank FDs are quite different from corporate FDs. Here is a brief comparison noting diverse factors:

Feature	Bank Fixed Deposits (FDs)	Corporate Fixed Deposits (FDs)
Issuer	Banks (Public/Private)	Corporates, NBFCs, Housing Finance Companies
Safety	High (regulated by RBI, insured up to ₹5 lakh)	Moderate (depends on company credit rating)
Returns	Usually 5-7% per annum	Usually 7-9% per annum
Liquidity	Easy to break, but with penalty	May have lock-in period, harder to liquidate
Risk	Low	Higher (linked to company performance)
Taxation	Interest taxable as per income slab	Same as bank FDs (taxable interest)
Senior Citizen Benefits	Extra 0.25-0.75% interest	Extra 0.25-0.50% interest (varies by issuer)

Remember that the extra 1-3% interest that corporate deposits offer comes with higher risk as compared to bank deposits. One must check the credit ratings, financials of the company and the previous track record of its financial instruments before investing in a corporate FD.