A Company Fixed Deposit is a deposit placed by investors with companies for a fixed term carrying a fixed rate of interest. CFDs are like unsecured loans borrowed by a company from the investors. These are similar to bank fixed deposits with a few differences. In this, the fixed deposits are held with companies. CFDs are offered by manufacturing companies and NBFCs for different tenures and with a different frequency of interest payments.
In simple words, the deposits placed by investors with financial institutions, Housing Finance companies and Non-Banking Finance Companies (NBFCs) for a fixed term carrying a prescribed rate of interest is called Corporate / Company Fixed Deposit.
CFDs are of 2 type-:
CFDs offer many benefits to an investor including-
An investor must consider the following factors before investing in a CFD-
Company Fixed Deposits
Bank Fixed Deposits
Manufacturing Companies & NBFCs
Companies Act, 1956
Banking Regulation Act, 1949
Investments Insured Up To
Higher than banks.
Lower than CFDs.
Minimum Investment Duration
The interest earned on CFDs is taxable falls in the 'income from other sources' category of an investor. TDS is deducted for interest amount exceeding above ₹5,000 a year. Investors falling in zero/nil tax bracket, need to submit Form 15H every financial year to avoid TDS deduction.