Making Risky Bets On Company FDs

While bank fixed deposits are a very common avenue of investment, corporate fixed deposits or company deposits are the slightly less preferred cousin. Usually, when any corporate has an immediate cash requirement, they offer fixed deposits. They offer attractive interest rates which are almost 100-200 basis points higher than bank fixed deposits. Over the years, company fixed deposits have lost their popularity. That is mostly because its rate of interest, which was initially as high as 10 to 11 per cent, has come down significantly. And, investors looking for secure products have shifted to debt funds because they offer more liquidity and tax efficiency. However, during the recent market corrections, some investors invested in company deposits looking for safer avenues to park their money. Default Risk Company fixed deposits are not safe products. While banks provide security on...