Fixed Deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFC’s) also accept such deposits. Deposits thus mobilised are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the documents to recover his capital, thus making them a risky investment option.
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Fixed Deposit
Benefits of investing in Company Fixed Deposits
- High Interest Rate.
- No deduction of Income TDS at source up to Rs 5,000 p.a.
- Minimum availability is only 6 months.
- Company Fixed Deposits are non transferable that means there is no fear of FD receipt being stolen. In case it falls into wrong hands ,it cannot be misused. The FD holder in such a case should write to the company which shall issue duplicate deposit receipt upon execution of an indemnity and cancel the previous one.
- Further, advantage of investing in company fixed deposits is that one can analyse the company before investing in it because companies accepting deposits are old-established reputed companies with proven track records.