Company Fixed Deposits

Like bank fixed deposits, Company fixed deposit is a deposit with financial institution and non-banking finance companies {NBFC} for a fixed rate of revisit more than a fixed tenure. The rate of interest depends on the maturity tenure and those deposits are governed by section 58A of the Companies Act of 1956.

Capital Protection

The capital in the company fixed deposit is not secluded as these are not secured like most bank deposits.

Inflation Protection

The company deposit is not inflation sheltered, which earnings whenever inflation is above the guaranteed interest rate is eminent than inflation rate, it does straight a positive real rate of revisit.

Guarantees

The interest rate on the company deposit is definite as long as the company can manage to pay the depositors. on the other hand, company deposits are recognized to wait and at times defaulting on payments.

Liquidity

The company deposit is liquid, despite the predetermined lock-in that deposits have. The liquidity is obtainable in the form of withdrawals subject to situation.

Credit Rating

A company deposit has to have a credit rating, which they can acquire from any of the credit rating agencies such as CRSIL, CARE or ICRA.

Exit Option

Premature encashment of the deposit is permissible.

Other risks

Savings in this product is risky because deposits are not tenable.

Tax Implications

The sum invested in a company deposit or the interest that it produces is not eligible for any tax concessions. The interest earned on a deposit on a yearly basis is added to the total income under the head ‘Income from extra sources’ and taxed accordingly.

Departing Online

Most company deposits are obtainable offline, unless it is being sold online in the course of a broking account.

Where to open a Deposit

Deposits can be made in a straight line with the companies offering the deposit or distributors promotion the same.

How to Buy

Formerly you have decided on the sum that you wish to invest and the tenure

You need to fill the deposit application from obtainable with the company.

Carry original identity proof for verification at the time of buying

You can advance in deposits with cash, cheque or demand draft drawn in favor of the company or the specified entity.

Points to Ponder

  • Company deposits are unsafe
  • No TDS in case the interest is only Rs. 5,000 in a financial year.
  • Interest income is offered monthly, quarterly, half-yearly or regularly
  • The recourse in case of delays or defaults are not very tight or regulated

Company Fixed Deposits:

Finance

Dewan Housing Finance Limited, Exim Bank, First Leasing, Gruh Finance, Housing Development Finance Corporation Ltd, Kerela Transport Development Finance Corporation, LIC Housing Finance Mahindra Finance Ltd Shriram Transport Finance Ltd SIDBI ( Individuals & Huf ) (Trust) Sundaram Home Finance (Regular) Tamilnadu Power Finance.

Government

Hudco (Individuals/Trust), National Housing Bank (Sunidhi), NHB SUVRIDDHI (Tax Saving ), Pnb Housing, SIDBI ( Individuals & Huf ) (Trust).

Manufacturing

Alembic Ltd., Ansal Housing & Construction, Ansal Properties & Infrastructure Ltd., Apollo Hospitals Enterprises Ltd., Bharat Bijlee Ltd, Bombay Dyeing and Manufacturing Company (Renewals), Bombay Swadeshi Stores Ltd. (Only Renewals), Ceat Ltd (Only Renewals), D.S Kulkarni Developer Ltd. (Only Renewals), Damodar Industries Ltd., Darcl Logistics, DCM Shriram Consolidated Ltd, Deepak Nitrite Ltd, Excel Industries Ltd. (Renewals), Fenner India Ltd, Foods and Inns, Gati Ltd., Godrej Boyce & Manufact. Ltd, Godrej Boyce & Manufact. Ltd., Godrej Industries Limited, Godrej Properties Ltd. (Only Share Holder), Helios & Matheson (Only Renewals), Ion Exchange (India) Ltd, J K Paper Ltd., Jagatjit Industries Ltd, Jagsonpal Pharma, Jaiprakash Associates Ltd, Jaypee Infratech Ltd., Jindal Saw Ltd. (Saw Pipes Ltd), Jindal Stainless Steel Ltd, JK Lakshmi Cement Ltd, JK Tyre & Ind. Ltd, JMC Projects (India) Ltd, Mahindra & Mahindra LtD, Mukand Engineers Ltd (Renewals), Mukand Ltd, Neesa Leisure Limited, Network 18 Media & Investments (Only Renewals), OCL India Ltd., Omaxe Ltd, Parsvnath Developers Ltd, Pearl Polymers Limited (Renewals), Prism Cement Ltd, Pudumjee Pulp (Fresh only from Mumbai & Pune), Surya Roshni Ltd., Talbros Automotive Components Ltd, Thirumalai Chemicals Ltd., Unitech Limited, United Spirits, Vadilal Industries Ltd (Renewals), Valecha Engineering Ltd. Visit Profit Krishna to know more about Company Fixed Deposits.


Features:

ELIGIBILITY

Resident Indians

ENTRY AGE

  • You need to be over 18 years old
  • Minors can open a deposit with the natural guardian operating it

MINIMUM INVESTMENT [Rs]

  • Minimum: Rs. 1,000/-
  • Maximum: There was no upper limit

INTEREST

  • Depends on tenure of the deposit and the issuer.

ACCOUNT HOLDING

  • Individual
  • Joint
  • As specified by the issuer

NOMINATION

  • Facility is available

Gitanjali Gems Fixed Deposit

Gitanjali Gems have begun a fixed deposit scheme. The annualized yield is 14.89% for a Three year fixed deposit scheme. Whereas there is only one negative point, there are several positive factors which can be considered for investing in Gitanjali Fixed Deposit Scheme.

Gitanjali Gems is one of the largest included diamond and jewels manufacturers and retailers in India. It owns and distributes eight out of top ten jewellery brands in India which take in Gilli, Nakshatra, Asmi, D’Damas, Sangina and Diya.

Key Features of Gitanjali Gems Fixed Deposit Scheme:

Fixed Deposit Scheme is available in cumulative and non-cumulative schemes.

1) Features of cumulative Fixed Deposit Scheme

  • Interest would be compounded quarterly and would be paid at maturity.
  • Minimum investment is Rs. 25,000. You can invest additional amounts in multiples of Rs. 1,000.

GITANJALI GEMS – FIXED DEPOSIT SCHEME CUMULATIVE DEPOSITS

Period

Minimum Amount {In Rs.}

Rate of Interest %P.A

Amount Payable on Maturity {Rs}

Effective Yield {%} P.A

1 Year

25,000

11.50%

28,001

12.01%

2 Years

25,000

12.00%

31,669

13.34%

 3 Years

25,000

12.50%

36,167

14.89%

2) Features of Non-Cumulative Fixed Deposit scheme

  • Interest would be compounded quarterly and would be paid at the end of the quarter.
  • Minimum investment is Rs. 25,000. You can invest additional amounts in multiples of Rs. 1,000.

GITANJALI GEMS – FIXED DEPOSIT SCHEME Non – CUMULATIVE DEPOSITS

Period

Minimum Amount {In Rs.}

Rate of Interest % P.A

1 Year

25,000

12.00%

2 Years

25,000

12.25%

 3 Years

25,000

12.50%

3) Common features for both cumulative and non-cumulative deposits

  • Interest and repayment would be done through ECS of the bank account specified in application form. Alternatively company can issue interest warrants and principal repayment cheques in absence of ECS facility for a particular bank or city.
  • TDS would be deducted as per applicable rates.
  • Nomination facility is available.
  • Pre-mature withdrawal is available after 6 months subject to certain conditions.

Advantages of Investment

  • High interest rates of 12.5% per annum for three years. Due to quarterly compounding, annualized yield would work out to be 14.89%. Banks are offering FD rates of 9%. Considering this, it would be a good option to invest in such Fixed Deposit schemes. Early this week, Sumeet Industries has offered similar 12.5% per annum Fixed Deosit’s where annualized yield is at 15.07% due to monthly compounding. Whereas Gitanjali Fixed Deposit scheme interest is compounded every quarter, hence there is slight difference in the yield.
  • Gitanjali Gems has a track record of paying dividend for the last 8 years. It has paid 30% dividend in the last three years.

Disadvantages of Investment

  • Company Fixed Deposit schemes are always unsecured and high risk.
  • You may be delayed for interest payment and principal repayment.
  • These are illiquid. Gitanjali Gems Fixed Deposit scheme has put a condition that investor can apply for pre-mature withdrawal after six months of starting a Fixed Deposit scheme, On the other hand at the company sole discretion, it MAY accept such application. Means there is no guarantee that company would accept your pre-mature withdrawal application.

For more information about investment fixed deposit, visit – Profit Krishna.

Termination:

Gitanjali Gems Fixed deposit scheme interest rates are attractive. It has good track record of profits and it pays dividend for the last eight years and paid 30% dividend in the last three years. Still, due to conditions put in by company, one may or may NOT have pre-mature withdrawal. Considering this, an investor who is willing to take risk and do not require investment up to three years, can do moderate investment in such fixed deposit schemes.

Sumeet Industries Limited Fixed Deposit Scheme

Sumeet Industrues has begun fixed deposit for a occasion frame of 1-2 and 3 years respectively. The lowest amount amount of asset is Rs 20,000 and in multiples of Rs 1,000 after that. The annualized yield is as high as 15.07 Percentage for a three year fixed deposit. At the same time as the yield looks fine, check several indications to deposit in the scheme.

Sumeet Industries is an Surat Based and in the textile business with a spinning capacity of 100,000 TPA. It fabricates and exports pet chips, polyester yarn & polypropylene yarn. It has Twenty Years of track record in textile sector. Sumeet Industries listed in NSE and BSE and has a track record of paying dividend for the last three years.

Fixed Deposit scheme is available in Cumulative & Non-cumulative schemes.

1} Silent Features of Cumulative Fixed Deposit scheme:

  • Your interest would be calculated monthly and would be paid at maturity.
  • Minimum investment is Rs. 50,000. You can devote additional amounts in multiples of Rs. 1,000.

SCHEME: 1 Non-Cumulative Fixed Deposits

Period

Minimum Amount {In Rs.}

Rate of Interest % P.A

One Year

50,000

12.00%

Two Years

50,000

12.25%

Three Years

50,000

12.50%

2) Silent Features of Non-Cumulative Fixed Deposit scheme:

  • Your interest would be calculated monthly and would be paid at the end of the quarter.
  • Minimum investment is Rs. 20,000. You can invest additional amounts in multiples of Rs. 1,000.
SCHEME: 2 Cumulative Fixed Deposits

Period

Minimum Amount                                  {In Rs.}

Rate of Interest % P.A

Amount Payable On Maturity {Rs}

Effective Yield {%} P.A

One Year

20,000

12.00%

22,536

12.68%

Two Years

20,000

12.25%

25,520

13.80%

Three Years

20,000

12.50%

29,042

15.07%

3) Common features for mutually cumulative and non-cumulative fixed deposits:

  • Post dated interest cheques should be dispatch in advance. Also post dated principal repayment cheque would be sent along with Fixed Deposit acknowledgment.
  • Tax Deductions would be deducted as per applicable rates.
  • Nomination facility is accessible.
  • Pre-mature withdrawal is available after six months. On the other hand 2 percent would be reduced as penalty from original interest rates.

Read more in detail for  Sumeet Industries Limited Fixed Deposit Scheme.

Why to Invest:

The interest rate of 12.5 percent per annum is upper by 300-350 basis points than that offered by the majority banks. Sumeet Industries is profit making and dividend paying. It places a grid profit of Rs 19.15 crore for the year ended March 2013.

Why you should not invest:

Sumeet Industries fixed deposits be unsecured and illiquid. Interest income from business fixed deposits is chargeable and for individuals in the highest tax group the post tax return works out to a meager 8.67 Percent. As of March 2013, and 55.42 percent of the promoter shareholding is oath.

Termination: Sumeet Industries Fixed deposit scheme interest rates are good-looking. It has good quality track record of profits and it pays dividend for the last three years. On the other hand, in case of urgent need, one cannot withdraw the amount as there is a 2 percent penalty on original interest rate. Bearing in mind this, an investor who is willing to take risk, can invest moderate investment in such fixed deposit schemes.

Fixed Deposit

Fixed DepositA bank deposit is also known as fixed or term deposit, which can be opened by account holder to earn better interest compared to the interest that the account balance earns in a savings bank account. This is a type of instrument in which a certain sum of money is placed with the bank for a specified time period at a fixed interest rate.

The interest rate offered by banks on such deposits depends on the number of days, weeks or months for which the deposit is maintained. There is great flexibility in the maturity period which ranges from 15 days to 10 years. The interest is higher in case of longer maturity periods and can be compounded quarterly, half-yearly or annually and varies across banks. The main draw for such deposits is guaranteed higher interest that deposits earn.

Capital Protection

The capital in a bank deposit is not fully protected. Till recently, all bank deposits were insured under the Deposit Insurance and Credit Guarantee Scheme of India, which now have been made optional exposing the deposits to risks if the bank is not insuring deposits.

Inflation Protection

The deposit is not inflation protected, which means whenever inflation is above the deposit interest rate; the deposit earns no real returns.  However, when the interest rate is higher than inflation rate,  it does manage a positive real rate of return.

Guarantees

The interest rate is fixed and guaranteed for the duration of the deposit at the commencement of the deposit.

Liquidity

The bank deposit is liquid, despite the lock-in during the tenure of the deposit. The liquidity is offered in the form of loans and withdrawals subject conditions.

Credit Rating

Bank deposits do not carry any credit rating.

Exit Option

Early closure of a deposit is permitted with a penalty.

Other risks

  • Interest rate changes pose risks to existing deposit holders; for instance, you may have locked-in at a lower interest rate but due to economic factors; the bank starts to offer a higher rate on deposits later.
  • If the bank where you have the deposit does not have deposit insurance and credit guarantee, you run the risk of losing the capital and the interest.

Tax Implications

The amount invested in deposits with a maturity period of 5 years in a scheduled bank is eligible for tax deduction under section 80C. However, the interest earned on the deposit is taxable.

Various Types of Bank Fixed Deposits

Fixed Deposit

  • In this type of deposit both tenure and the interest rate for the tenure is fixed.

Recurring Deposit

  • In this type of deposit, bank account holders deposit equal amount of money every month.
  • The interest rate is fixed for the deposit tenure and so is the number of monthly instalments.

Security Deposit

  • A few corporate organizations stipulate new employees to provide security deposit to check attrition.
  • This deposit is made by an employee and he cannot withdraw such fixed deposits without the consent of the employer.
  • The company has the right to the FD in the event of employee leaving the organization before certain stipulated period.

Tax-saver Fixed Deposit

  • Deposit with 5-year lock-in offer tax benefits under Section 80C.

Where to open a Deposit

You can open a deposit at any nationalized, private sector or foreign bank.

How to Open a Deposit

  • Select the bank to open the deposit.
  • Choose a nominee and get a witness signature.
  • Your existing bank account counts as being KYC compliant.

How to Operate Deposit

  • You can issue cheque to the bank through your existing savings bank account to start a deposit.
  • A deposit receipt or certificate is issued detailing the deposits features

Types of Transaction

  • Cheque
  • Money Transfer
  • Electronic Clearing Services {ECS}

Points to Ponder

  • Minimum sum to start a deposit
  • Penal provisions in case of partial or early foreclosure

Fixed Deposit Interest Rates of Various Banks in Percentage

Bank

6 Months-365 days

1-2 Years

2-3 Years

3-5 Years

Above 5 Years

Axis

7.50

8.50-8.75

8.75

8.75

8.50

Bank of Baroda

7.30-7.75

8.50-8.75

8.75

8.75-8.90

8.75

Bank of India

8.00

9.00

9.00

9.00

8.75-9.00

Bank of Maharashtra

7.50-8.50

9.00-9.10

9.00

9.00-9.10

9.00

Canara Bank

7.25-9.00

9.05

9.05

9.05

9.05

Central Bank of India

7.75

9.00-9.15

8.75

8.50

8.50

Corporation Bank

8.75-9.00

9.00

9.00

9.00

8.75

Dena Bank

8.50

9.00

8.75-9.25

9.00

8.75-9.00

Hdfc Bank

7.50-8.00

9.00-8.75

8.75

8.75

8.25

Icici Bank

7.00-7.25

7.50-9.00

8.75

8.75

8.50

Idbi Bank

8.65-8.75

8.75-9.00

9.00

9.00

8.50-8.75

Iob

8.50

9.00

9.00

9.00

9.00

Ing Vysya

8.70

9.25

9.25

9.00

8.50

State Bank of India

6.50

8.75

8.75

8.75

8.75

Syndicate Bank

7.75-8.00

8.50-9.00

8.00

8.00

8.00

Vijaya Bank

8.50

9.00

9.00

9.00

9.00

Features:

ELIGIBILITY

You need to be a Resident Indian with a savings bank account.

ENTRY AGE

  • You need to be over 18 years old
  • Minors can open a deposit with the natural guardian operating it

MINIMUM INVESTMENT [Rs]

  • Minimum: Rs. 1,000/-
  • Maximum: There was no upper limit
  • Deposits above Rs. 15 lakh upto Rs. 1 Crore qualify for special interest rates

INTEREST

  • Starts from 7.05 percent to 9.00 percent per annum
  • Depends on the tenure of the deposit and RBi changes {See table for Current Rates}

TENURE

  • Currently offered  up to 10 years

ACCOUNT HOLDING

  • Individual
  • Joint
  • Minor through guardian
  • Companies or Associations or Trust
  • Hindu Undivided Families [HUF] not engaged in any trading business activity

NOMINATION

  • Facility is available

Click Here to Know more about Fixed Deposit investment growth rate from our expert.