Bank Fixed Deposit Vs. Corporate FD, Risk and Returns

Fixed deposit is one of the best methods to earn a fixed income without any risk or minimal risk. Customers are required to invest just one time to get a fixed rate of interest at a regular interval over a period of time.

Bank Fixed Deposit (FD)

Bank deposit is a very popular mode of investment in which there is no risk. It is mainly preferred by retired people or we can say to the risk-averse investors who don’t want to take any risk.
To open a FD, customers required to deposit a fixed minimum amount for a fixed period.

Corporate Fixed Deposit (FD)

Corporate fixed deposits refer to the FD’s offered by corporate companies at relatively higher interest rates than bank fixed deposit. The reason behind offering a higher interest rate is the higher risk.
If you want to apply for the corporate fixed deposit, you will have to go to the company to collect the FD form or you can download it from the company’s website.

Bank FD vs. Corporate FD

• Offered by: Bank FD is offered by different banks of India while the corporate FD is offered by companies.
• Tenure period: The range of tenure period in bank FD starts from months to years while in corporate FD it is from 6 months to years.
• Risk involved: Low risk involves in bank FD and high in corporate FD.
• Yield: Currently bank FD yield ranges from 5.10%-6.20% and the corporate FD yield is 6.20%-8.10%.

FD Return Comparison

Corporate FD	Tenure	Rate	Bank FD	Tenure	Rate
Mahindra finance FD	15 to 40 months	6.80%-7.30%	HDFC Bank	7 days-10 years	3.00%-6.25%
LIC Housing Finance	1-5 years	6.00%-6.10%	PNB	12 months to 120 months	3.00%-6.05%
HDFC Ltd. FD	1—5 years	6.15%-6.25%	ICICI Bank	3.25%-6.25%	7 days to 10 years
PNB Housing FD	1-7 years	6.65%-7.00%	AXIS bank	3.50%-6.75%	7 days to 10 years

Where should you invest?

The decision of investment between bank fixed deposit and corporate fixed deposit depends on the risk -bearing capacity of an investor up to a maximum extent. If a customer is ready to take higher risk to earn high return than the corporate FD is good for him/her and for safe investment bank FD is good.