Should you opt for Bank Fixed Deposit or Company Fixed Deposit


There are a lot of investment options available in India, right from real estate investments to mutual fund investments to term deposit investments. But not all investment options can be considered as a safe instrument for investment. Investing in real estate or mutual funds can be risky as the returns that you will earn are dependent on the market conditions, whereas, investing in term deposits are not risky as the returns are not dependent on the market conditions.

Wherever you choose to invest your money in, it is necessary that you have a proper knowledge about that instrument. Out of all the above mentioned investment options, term deposits are considered as the safest instrument of investment since you are guaranteed that you will get your returns. There are two types of term deposits: fixed deposits and recurring deposits. In fixed deposits, you only have to invest once during the entire tenure, whereas, in recurring deposit, you need to invest some part of your income every month until your deposit matures.

One thing that you need to keep in mind while investing in the fixed deposit is that you will not have access to this money until the fixed deposit matures. There are a lot of benefits of investing in fixed deposits, but you need to understand that there are other financial institutions apart from the banks who offer fixed deposits as well. The fixed deposits offered by Non-Banking Financial Companies (NBFCs) are called as Company Fixed Deposits.


When it comes to choosing between the banks and the company for FD Investment, here are some of the things that you should probably keep in mind:

Security of the Deposit:

If you compare the bank fixed deposit schemes with the company fixed deposit schemes, the bank fixed deposit schemes are much safer. The bank fixed deposit schemes are associated with the Reserve Bank of India, hence, you can be assured that you will get the returns that you earn.

The Returns on Investment:

When you invest your money in fixed deposits, you will earn some interest rate on the deposited amount. Different financial institutions offer a different rate of interest. The rate of returns that you earn on your bank fixed deposits is less as compared to company fixed deposits. If you invest in company fixed deposit, you will earn a higher interest amount as compared to the bank fixed deposit.

Paying Tax on the Returns that you Earn:

You need to remember that irrespective of the financial institution you choose, you need to pay tax on the returns that you earn. If you earn more than INR 10, 000 after investing in the bank fixed deposits or if you earn more than INR 5, 000 after investing in the company fixed deposits, you will have to pay tax on the excess amount based on the tax bracket that you fit into.

All the above points should be kept in mind before you invest your money. A lot of people opt for company fixed deposits instead of the bank fixed deposits because company fixed deposits offer a better rate of interest comparatively.

While investing your hard-earned money, you should always choose to invest in a FD that is offering higher rate of interest. The higher the rate of interest, the higher will be the returns that you earn.

You can choose how you want to receive the returns that you earn on your investments. You can choose to receive the returns periodically, i.e. you can get the returns on monthly, quarterly, half-yearly or even yearly basis. You can also choose to get the cumulative returns at the end of the tenure. The interest amount that you were supposed to get during the tenure will get reinvested, hence, you will receive higher returns comparatively.

Irrespective of the financial institution that you choose to invest with, you need to make sure that the institution has a good reputation in the market. You should choose a financial institution based on the interest rate they are offering, their reputation in the market and the other benefits that the institution is offering.