Why Corporate Fixed Deposits Have Fascinated Indian Households

"Beta, ek FD Karlo!", if you are an Indian, you have probably heard this phrase a number of times. But has any of us tried to introspect, why Indians are obsessed with fixed deposits?

Corporate Fixed Deposits have been a trusted investment trend within Indian families. With time, the way people invest their money has changed largely and fixed deposits have proven to be a reliable and lucrative tool time and again. Corporate FDs are provided by financial and non-banking financial companies (NBFCs). Such corporate FDs are offered by many big companies in India at attractive interest rates and credit ratings.

While investing your money, one thing that everyone is wary of is how safe the investment is. Families who depend on returns from investments do not go for high risk investment options. That is why corporate fixed deposit is a popular financial option because it remains one of the safest ways in the market to invest your money. Whether the returns come regularly or after a long term, it is upto the investor to choose. Corporate FDs also allow investors to choose lock-in period amongst various options available. A lock-in is a period during which one cannot cash out the FD. There are many other opportunities to invest in the market such as bonds, stocks and mutual funds but these depend on the trends in the market and therefore impact on their returns. Of course, having a higher investment capital allows one to dabble in other ‘high risk - high return’ investment tools but it is always advisable to have investments like fixed deposits in your portfolio to cushion any loss that may occur when the market is not performing well. A corporate FD account shields a person from market risks by minimising it. Whether the household runs on salary basis or business basis, such low risk investments are preferred by and advised for all. However, one must choose the company offering corporate deposit carefully as far as safety evaluations are concerned. It is important that you invest in a company with high credit rating.

Higher interest rates than a bank FD and hence higher returns makes corporate FDs a preferred go-to method for most of the Indian population. Flexibility is another beneficial thing about corporate fixed deposits; there are fixed deposit accounts that range from periods of 6 months to as long as 3-5 years, whereas traditional bank FDs have a much longer tenure. Families that depend on the interest payouts from their investments to run the household can go for monthly or quarterly payouts and those who are interested in long term investments can opt for the longer term options. These deposits come in handy on a rainy day when there is an urgent need for money. Without having savings and depending solely on your monthly income, one is prone to facing financial difficulties during an economic meltdown. With fixed deposits, you always have something to fall back on - either by breaking the FD or offsetting a loan against the principal FD amount.

In conclusion, because of its reliability, availability and safe ROI, Corporate FDs are a great investment tool for citizens of all ages and financial backgrounds.