Bank FD Vs Corporate FD: 8 Things To Know

Bank FD

A bank fixed deposit is held for a predetermined time and returns. Bank FDs

Corporate FD

These fixed deposits also have a set duration and rate of return. Corporate FDs

Safety & Reliability

Bank FDs are insured by DICGC for Rs 5 lakh per bank, while the safety of Corporate FDs depends on the company’s financial health and credibility. Safe & Reliable

Interest Rates

Bank FD rates are influenced by economic conditions and central bank policies; Corporate FDs offer higher interest rates as per their funding needs. Interest Rates

Liquidity

Bank FDs offer moderate liquidity, often allowing premature withdrawal with a penalty; Corporate FDs may have longer lock-in, limiting access to funds. Deposit Liquidity

Taxation

Bank FD interest is taxed according to tax slab; Corporate FD interest is also taxable, but rates vary based on various factors. Taxation

Credit Rating

Banks lack credit ratings and are deemed safe due to government backing. However, higher-rated corporate FDs are considered safe investments. Credit Ratings

Lock-In Period

Corporate FDs typically come with longer lock-in periods compared to bank FDs. Compiled by Himani Verma Lock-In-Period