Fixed deposits: These finance companies are offering up to 7.25% interest for 1 year tenure

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A fixed deposit (FD) is one of the safest investment options which offers a assured return. It is still a choice of investment for many middle-class Indians as it has negligible market-related risks and offers higher interest rates than a savings account. In an FD, the account holder can deposit a specific amount for a fixed tenure.

The bank offers interests, depending on the FD tenure and the deposit amount. This interest varies from bank to bank.

But, conventional FDs provide low interest rates, and sometimes their interest rates also fall. 

For such reasons, many investors also invest in corporate FDs or company FDs as they offer higher returns than bank FDs.

Corporate FDs are similar to bank FDs. Multiple financial companies and NBFCs provide an option to deposit money for a fixed term at a prescribed interest rate. Generally, corporate FDs provide higher interest rates than bank FDs which come at a price of high risk. 

Corporate FDs are riskier

These are riskier than conventional FDs as the deposits are unsecured. They give a 1-1.5% higher interest rate than normal FDs.

The investor should understand that they give higher returns only because they are risky. Money deposited is at risk if the company defaults.

Company FDs are not covered by the DICGC (deposit insurance of up to Rs. 5 lakh which is only for bank FDs). It is important to check the credit health of the company.

The credit health of the financial companies and NBFCs is determined by the various credit-rating agencies like CRISIL, ICRA, and CARE.

When investing, individuals should ensure that they are investing in AAA-rated corporate FDs only. 

Here are the latest fixed deposit rates: