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FD Update: What is corporate FD and how different is it from normal bank FD? What are the advantages and disadvantages?

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Corporate FD: Despite various means of investment, fixed deposit is still the favorite option of people because in it people get guaranteed returns and their money also remains safe. If you are also among such investors then you should know about corporate FD once. The advantage of corporate FD is that you can get more profits from it as compared to bank FD. Know what corporate FD is and what are its advantages and disadvantages.

Higher interest in corporate FD

Bank FDs are issued by banks, but corporate FDs are issued by many companies. Through corporate FD, companies raise funds from people to meet their needs. This FD also works exactly like a bank FD. For this, the company takes capital from investors for a fixed period and returns the amount along with interest to the customers. To attract people, better interest is offered in corporate FD than in bank FD.

FD of different tenures

Generally, the maturity period of corporate FD is from 1 to 5 years. Like banks, the interest rate may be different for different periods. Just as banks give extra interest on FDs to the elderly, in the same way, in all corporate FDs, the elderly are given extra interest as compared to normal FDs.

What are the disadvantages?

Generally, bank FD is considered a safe investment option because the strict rules of the Reserve Bank are followed. However, the risk in corporate FD is slightly higher than that of bank FD. In case of bank collapse, the insurance benefit is available under DICGC on the deposited amount, but there is no such insurance on corporate FD. If the company sinks, your money may also sink. However, if you invest money in companies with good ratings, the risk can be significantly reduced. Before investing in corporate FD, check the record of that company for 10-20 years.

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