6 things you should know about company fixed deposits

I recently received a comment from a reader about investing in company fixed deposits, and I thought I should do a post about some important things to keep in mind while investing in company fixed deposits.  So, here is a post with a few pointers on company fixed deposit.

Company Fixed Deposits
Company Fixed Deposits

1. Company fixed deposits offer better interest rates than banks

You probably know this already but it is an important enough point to be on top of the list. Company fixed deposits will give you a higher return than comparative bank fixed deposits. This is because of the additional risk, for example the DHFL fixed deposit that was concluded a few months ago offered interest rate of 9% per annum, when the highest any bank was offering was 7%.

2. Additional risk

Company fixed deposits have higher risk than bank fixed deposits because these type of deposits are unsecured, if the company goes bust you will lose your money, and unlike banks, they don’t have any backing of the RBI. A lot depends on the performance and reputation of the company of course. A strong company that regularly pays out dividends and has no losses is perhaps a good bet, whereas a company that has made regular losses should raise eyebrows.

3. Company fixed deposits are rated by Rating Agencies

The rating agencies hand out ratings to the particular offering, and that can help you make a decision. For example, The Shriram Transport Finance FD scheme was rated tAA (investment grade) by Fitch. These ratings can help raise flags if any offering is rated low, and you can possibly avoid such fixed deposits.

There was a comment that asked what the RBI rating of a fixed deposit was, but RBI does not rate company fixed deposits, and in case of default by the company – RBI is not going to back them in any way.

4. Company fixed deposits may be unsecured

Company fixed deposits may be unsecured debt, which means there is no underlying collateral, and in case of default, you won’t get the funds back by selling off your documents.

5. TDS on Company Fixed Deposits

If the interest you get from the deposit is less than Rs. 5,000 in a year, then there won’t be any TDS on it. You can think about spreading your investments in multiple fixed deposits if you foresee a situation where your interest is going to be larger than Rs.5,000 from one fixed deposit.

6. You could keep a shorter horizon

Normally, a  higher time period will get you higher interest rates, but if you are not very comfortable with investing money in a company fixed deposit then you can select a shorter time frame like a  year.

Like most investing decisions, whether you invest in these things or not, and how much money you do will depend on your particular circumstances. If you prefer safety over everything else, then it is best to leave these things alone. If you have a moderate risk appetite then you might as well try investing money with some of the better known companies.

Image: Bhautik Joshi

Update: The earlier version said that company fixed deposits are always unsecured debt. This is not always true, in some cases they issue secure debt as well.

66 thoughts on “6 things you should know about company fixed deposits”

  1. Me and my father have deposited big amount in Hellios & Matheson and the final interest warrent and the FD cheque got bounced back. The company is not replying to any phone calls in mumbai. Kindly tell us the procedure to get back the principal amount. Where can we complain? As well as any email id of concern person in helios?

    Can you add me to the Whatsapp group ? My number is 0 7838717267

    Parul rana

  2. Do not belif on agency rating,best example is Helios & Matheson,It is rated very stable company few months back.Now the company is not even paying principal amount.

  3. Has anyone invested in FDs in Dewan Housing Finance Corporation Ltd. (DHFL). Does the maturity amount come back in time?

    What about PNB Housing Finance Ltd (PNBHFL). Any issues encountered by anyone for getting the maturity amount back in time?

    1. Yes I have invested previously in DHFL & presently too. Their services are very good & matured amount is issued by DD at one time.
      You can go ahead with the investment.

  4. Hi All,
    If any one interested in Shriram Group Fd (Shriram Trasport or Shriram Cityunion).
    ICRA- AA+
    CRISIL – AA+
    CARE – AA

  5. I did 3 fds of Rs.37000 each with M/s Ansal Properties And Infrastructure ltd . New Delhi and the maturity of my FDR’s were on 18/4/14. But inspite my countless reminders I have not RCD. My maturity amnt till date.. Pl.help me out to get my money back. Thanks

  6. I have a Unitech FD for Rs 1 Lakh and the 3 year FD matured in 12/2/2014. I have surrendered my FD immediately , but till now I have not received my principal amount back. Can you please help me how to get it back. All company phone lines , there is no response. Also no repy for my innumerous e-mails.

  7. Hi, I have invested around 0.5 Lakhs in Unitech FD and Ansal Api
    I am investing in this company from last 1 years. But each time I bought 1 Year FD only.
    Like this, I bought 2 FDRs last year, they sent me interest cheque along with FD Document which got cleared. But after maturity when I deposited my FD bonds, they do not send me the principle amount. I am waiting since June 2014.
    Can you please help what to do get my money back?
    I am also scared after Sahara Scam

  8. Hi, I have invested around 3.5 Lakhs in Unitech FD.
    I am investing in this company from last 5 years. But each time I bought 1 Year FD only.
    Like this, I bought 2 FDRs last year, they sent me interest cheque along with FD Document which got cleared. But after maturity when I deposited my FD bonds, they do not send me the principle amount. I am waiting since January 2014.
    Can you please help what to do get my money back?
    I am also scared after Sahara Scam.

    Please help

  9. Hi Manshu,
    I am new to fixed deposits and like to take up your advice. I have one lakh rupee that I have planned to split into 3 (40,40,20) and invest in DHFL, Tamilnadu power finance and Mahindra finance for 3 years. I have planned to take it on my wife’s name, who is currently not working, so that I can avoid paying any TDS. Is my planning is the best one? Is the company that I have chosen is the best companies in paying highest interest and security, based on their history? Can you please suggest whether I need to change my plan?

  10. Hello Rachita, Reg. Helios Matheson, I am also in the same boat. Our FD cheque & interest cheques were stopped payment by company. I spoke with company person at Mumbai office (Rupesh). He promised that they are awaiting funds and will be cleared within 6 months. Asked me to send FDR, bounced cheques copies by scanning them. Also include bank charges proof. Email id: rupesh.b@heliosmatheson.com. We may have to wait. I wonder bouncing a cheque is criminal offence. How a company can do it?

    1. i am also on same boat mine both cheques pri amt 30000 and interest cheque dishonored. i am issuing demand notice for it for taking legal action on it we must unite against such fraudulent company we need to issue demand notice with in 30 days of cheque dishonored


  11. We had placed an FD of Rs 50,000, with Helios and Matheson in June 2012 for 2 years. We were issued all the cheques regarding the interests as well as the original amount for presenting to the bank at appropriate times.
    After maturity, in July 2014, when the cheque for the FD amount was presented it was not honoured and returned with the remark that the party had stopped payment.
    After many attempts also the company site could not be opened. We are therefore not in a position to contact anybody from the company.
    Could any one inform me the e-mail address of the person to be contacted ?
    What are the options available for claiming FD amount ?

    Rachita Gogate

    1. Ruchita,

      For cheque bouncing you have to file cheque bouncing case. I am in process of filing cheque bouncing case for my clients who are suffering because of same company.

      Ram Kutwal,
      Advocate. Mob:- 9022701818

  12. I have a fixed deposit with Ansal properties & infrastructure ltd.

    I have not received any interest for this financial year.

    There is no notification on the reason for non payment and no proper contact to follow up with.

    Please be careful when investing with Ansal properties & infrastructure ltd

  13. Hi all,
    I want to sensitize the public against the malpractices being followed by the company Sejal alias Sezal, etc in offering company FDs at attractive interest rates of 15 % or higher…
    I invested Rs 20k in Feb 2000 in a three year FD. On maturity of the same, I have got only the interest amount of around Rs 8.5k and the principal has not been returned.
    I have tried to contact the company offices and their registrar, M/s Link Intime through post, e-mail, telephone, etc for the past three months, but there has been no response through any modes of communication.
    I have complained to the company law board mumbai and the disposal is awaited.
    So, ,please all those who have invested, try and get immediate redemptions, if possible…. and those who planned to invest….please don’t think that these FDs are good interesting earning tools.
    So much so that the registrar, M/s Link Intime who manages several thousand crores worth of investments, doesn’t seem to care and reply to investors. So carefully scrutinize any type of investment with Link Intime and choose someone else. Additionally, the company now continues to offer new FDs under a new name Sezal or alias,etc..None of its e-mails work or are responded.

    In the hope of preventing others to fall in trap of these crooks….

    1. Mr Himanshu…We too are in a similar situation like yours. We had invested Rs. 4 k in Sejal Glass on 5 May 2011 for 2 years and we got partial interest in July 2013. The balance interest and principal still eludes us despite innumerable visits and phone calls to their Office. Like you said , they have not replied to my letters and emails either. If there is any ruling from Company Law Board based on your complaint , would request you to please share it, as CLB website is no longer accepting investor complaints.

  14. I seek your guidance.
    I hv invested in Birla Power and Ankur Drugs & Pharma, both the companies are not paying interest as well as maturity amount.
    What is the remedy? Is there any website or portal or grahak manch where we can lodge a complaint against these cos?
    Also pls advise if approaching to CLB would help.

  15. Hi,

    I am planning to invest in STFCL’s Shriram Unnati Fixed deposit. The Credit Rating is good for the FD. Could you please suggest whether investing for 3 years in this FD will be a good decision?

  16. What is the taxation on Shriram Straight bonds? Is Indexation is allowed on the same or normal taxation of FD is applied?

    1. I am not sure about this one particularly, but if it is just a bond then that should follow the rules of bonds – what’s the difference between this and other bonds, do you know?

  17. In your opinion and considering today market scenario and when bank FD interest rate is going down, which NCD is secure (not secured by govt but company only) and can give more return.

    I know this is very complex but I need just your opinion.


  18. Hi Manshu,

    Did wrong calculation…

    NHB compounded annually (9.25% ) gives Rs109250 and Bank FD(7.25% compounded quarterly) gives 107449.

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