How is a corporate FD different from a bank FD?

A bank FD is held with a bank and is covered by deposit insurance up to a limit. A corporate FD is held with a company or NBFC. It often pays a somewhat higher rate, but it has no deposit insurance, so you should check the credit rating before investing.

What does a credit rating mean?

Agencies such as CRISIL, ICRA and CARE study a company and give its deposit a rating. AAA is the highest level of safety. A rating is an opinion, not a guarantee, and it can change over time.

Can I take my money out early?

Usually not in the first 3 months. After that, most companies allow it but pay a lower interest rate as a penalty. The exact rules are printed in the application form.

Is the interest taxed?

Yes. The interest is added to your income and taxed at your slab rate. The company may deduct TDS if your interest crosses the yearly limit. If your income is below the taxable limit, you may be able to submit Form 15G or 15H to avoid TDS.

What happens when the deposit matures?

The money is credited to your bank account. You can also choose to renew the deposit at the rate offered at that time.

RBI Regulated Corporate & NBFC Deposits

Fixed Deposits, explained simply

Set money aside for a fixed time, at a fixed interest rate.

In a corporate fixed deposit, you place a lump sum with a company or finance company (NBFC) for a period you choose. In return, it pays you interest at a rate that is fixed on day one and stays the same until the end.

See how it works

In everyday words

It is like lending money to a borrower who gives you a written promise: "I will pay you this much interest, and I will return your money on this date."

Interest rateFixed for the full term

Typical term1 to 5 years

Interest paidMonthly, quarterly, yearly or at the end

Safety checkCredit rating, such as AAA

What is included

Types of fixed deposits

Each type does a different job. Here is what the names mean.

Cumulative Deposits

Interest is added back to your deposit and paid in one go at the end. Suited to growing a sum of money.

Regular Income Deposits

Interest is paid to your bank account monthly, quarterly, half-yearly or yearly. Suited to those who need steady income.

NBFC & Housing Finance Deposits

Deposits with finance companies that are regulated by the RBI and rated by credit rating agencies.

Senior Citizen Rates

Many companies offer a slightly higher interest rate to depositors aged 60 and above.

Step by step

How it works

1
Compare options
Look at the interest rate, the credit rating and the term offered by different companies.
2
Pick a payout
Decide whether you want interest paid regularly or all together at the end.
3
Apply and pay
Complete KYC and fill the form. Payment goes from your bank account directly to the company.
4
Get your receipt
The company issues a deposit receipt showing the amount, rate, term and maturity date.
5
Receive your money
On maturity, the deposit and any unpaid interest are credited to your bank account, or you can renew.

A simple example

A 3-year deposit

Suresh places ₹1,00,000 in a cumulative deposit for 3 years at 8% a year, with interest added once a year. He does not touch it. At the end of 3 years he receives his deposit plus all the interest together.

Deposit₹1,00,000

Interest earned₹25,971

Received at maturity₹1,25,971

Illustration only. Actual rates vary by company and term, and tax is not considered.

Who is it good for?

Money you will not need for a known period
People who want to know in advance what they will receive
Retired people who need regular interest income
Balancing investments that move with the market

Things to keep in mind

Corporate deposits are not covered by the DICGC insurance that protects bank deposits, so the company's credit rating matters
A higher interest rate usually means a higher risk
Early withdrawal is restricted, usually not allowed in the first 3 months, and carries a penalty after that
Interest is taxed as per your income slab, and TDS may be deducted
After tax, the return may not always beat rising prices

Try the numbers

Helpful calculators

Free tools that run in your browser. Nothing you enter is stored.

FD Calculator

Inflation Calculator

Common questions

Fixed Deposits: questions people ask

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Still have a question?

Talk to our team. We will explain fixed deposits in your own language and help you compare the options. The decision always stays with you.

Disclaimer: Bonds, corporate fixed deposits, and other debt instruments are subject to issuer credit risk, interest rate fluctuations, and liquidity risk. Ratings represent the opinion of the rating agency and do not guarantee future performance. Read the information memorandum and offering documents carefully before investing. The information on this page is for general education only and is not investment, tax or insurance advice.