November 17, 2025 · 10 mins read
Santosh Kumar
In today’s financial landscape, we are all trying to figure out how to make our money work harder for us without taking on too much risk. Fixed Deposits (FD) have always been considered a safe and assured means of obtaining a return; however, many investors are now looking beyond traditional bank FDs into Corporate Fixed Deposits (Corporate FD). This form of investment doesn't necessarily represent a higher level of risk and is likely to garner greater returns.
If you have been wondering how to invest in corporate FDs, this guide will take you through everything you need to know and think about, including what a corporate FD is and how it works, the positives, the negatives, and how to know which choice is right for your financial objectives.
A Corporate Fixed Deposit is the same in principle as a bank FD. You are paying a sum of money for a fixed period of time, and in return, you are quoted a set rate of interest, but the issuer is different.
A corporate FD is issued by a company, generally, a non-bank financial company (NBFC), or other financial institution that is looking to raise capital from investors. The money you invest with them will be used for the purposes of facilitating that business, such as operating costs, expansion or lending.
In return, the company makes you interest payments at regular intervals (monthly, quarterly, half-yearly or annual) and pays back the principal at the end of the term.
Corporate FDs are regulated by the RBI and regulated by company law, and unlike their bank deposit cousin, they do not have insurance coverage through DICGC. This means they're potentially very lucrative, but you need to focus on diligence about creditworthiness.
The first step is to spend some time checking out a list of companies that provide corporate FDs. Be sure to include companies with sound financials and a proven record of paying you on time. For information regarding companies, you may have to search:
1: Credit rating agencies (i.e., CRISIL, ICRA, CARE)
2: The annual report and financial statements of the company
3: Via financial advisors or reputable investment platforms
Once you narrow down your list of trusted companies, you can compare the interest rates that they offer. Some companies may be offering marginally higher returns for longer tenures, or a specifically designated category of investors, like seniors. You will need to decide what tenure is suitable for your intended financial goal, whether that be for the short term (1 or 2 years), or medium term (3 to 5 years). Even though a longer tenure may generate higher interest, you will also have less liquidity during that timeline.
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Corporate FDs offer the option of being cumulative or non-cumulative.
1: For cumulative FDs, the interest is compounded and paid at the end of the term alongside the principal.
2: For a non-cumulative FD plan, interest can be withdrawn on a monthly, quarterly, half-yearly, yearly basis, or any set time frame agreed by the parties.
It is important to check the FD credit rating of the financial instrument before investing. This means the credit rating is the measure of whether the issuer can pay you money back on time. An FD credit rating of AA will denote the least risk compared to one rated B, which might assuredly offer a higher return, but at a greater risk of default, forsaking the original principles. A higher return is offered, and an accompanying higher risk of return will usually occur while offered. Make a weighted decision between your comfort of risk and return.
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Every company has its own rules concerning early withdrawals, renewal policies, and penalty clauses. Read the terms when investing, including the brochure applicable to the deposit. This is critical when it references the particulars of premature withdrawal clauses, TDS (Tax Deducted at Source), and benefits upon renewal of the deposited terms.
You have the option of investing in a corporate FD on the company’s site or through registered agents and investment platforms. You will need to go through a KYC process, share your PAN and identification, and provide banking documents either way. Be sure to invest only through credible and verified.
After you invest, keep track of your FD receipt, term and maturity date. When your FD is close to maturity, you can either pull out your funds or reinvest them, based on your financial needs and interest rate.
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The greatest selling point is the ability to earn more than bank fixed deposits. For investors seeking a modestly better return and who aren't quite ready to invest in high risk, it can be an attractive option.
Corporate fixed deposits allow investors the option of interest receipts - monthly, quarterly, or only upon maturity – thus, it can attract both income and growth investors.
They are easy to understand and invest in, and therefore attractive to those who are interested in investing above a product that is linked to the market, for example, mutual funds or equities.
If you’re planning for short-term financial goals such as a family vacation, renovation of a home, and expenses for education, corporate FDs can be a good option to keep funds parked safely.
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Many Corporate FDs have an additional interest rate provision for seniors, making them a reliable investment for seniors to have a regular income.
In contrast to bank deposits, corporate fixed deposits (FDs) do not hold the insurance backed by DICGC. This means that if the company fails or defaults, both your principal and interest could become in jeopardy. Therefore, it is important to be aware of the credit ratings and reputation of the company before investing.
If you wanted to withdraw a corporate FD prematurely, it would typically incur some fees, and in some cases, it cannot even be withdrawn at all before the minimum lock-in period is reached.
The interest payments from corporate FDs will be taxed according to your income tax slab. TDS (tax deducted at source) of around 10 (or whatever rate is determined) will be deducted at the source if the interest exceeds ₹5,000 in a financial year. This will still need to count toward the total of your annual income when you declare for taxes.
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Corporate fixed deposits may provide a better return than a traditional bank fixed deposit, but over time, these will fall short of inflation, especially for those long-term investors.
While corporate FDs can help your savings grow consistently, it is just as important to manage and track your day-to-day spending. This is where a ZET Credit Card can fit into your overall investment strategy. As a convenient credit tool where you earn cashback/rewards on just about every purchase, the ZET Credit Card allows you to spend with greater convenience and track spending more easily. Used responsibly, and by paying your bills on time and leveraging interest-free periods, the ZET Credit Card lets you keep liquidity and do not require you to cut into your investment plans. Using such a smart credit tool with stable investment options like corporate FDs will offer a balanced approach: earn more on your savings, control and track your spending, and ultimately, lead to better overall financial health.
Corporate Fixed Deposits provide a unique balance of safety and return that appeals to investors interested in adding to their income without exposing themselves substantially to fluctuations in the market. However, like any investment, they are not risk-free. The difference is in how selective you are: invest only with well-regarded, high-quality companies, diversify across companies, and always make sure to read the terms before signing. When you ask how to invest in corporate FD, it isn't solely about where you invest, but how you invest.
If researched and executed carefully, corporate FDs can be a reasonable addition to your investment portfolio, offering both safety and return that can, in the aggregate, outperform other types of investments.
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A corporate FD is referred to as a "fixed deposit," which is a scheme offered by a company or NBFC to raise funds from investors. Put simply, you lend money to said company for a specified period of time and receive interest at a rate that has been pre-agreed upon.
How safe is it to invest in corporate FDs ?
The safety of a Corporate FD highly depends on the creditworthiness of the issuer. Check the agencies’ ratings (either CRISIL or ICRA), and it is better to go with a highly rated option (either AA or AAA).
Yes, you can access your money early; however, it often results in penalties or a lower interest payout. The company may specify a minimum lock-in period.
Yes, the interest from a corporate FD is fully taxable under "Income from Other Sources". TDS will be deducted if the total interest exceeds ₹5,000 during the financial year.
You can start the process either directly with the company through their website, with the help of an agent or through a financial application. Complete KYC first and then choose a tenure and payout option and start transferring the principal safely.
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