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Comparative Assessment of Bank and Company FDs

Term deposits like Fixed Deposits (FDs) and Recurring Deposits are considered more secure than stocks and are offered by both banks and companies. The former offers lower returns than the latter but before deciding on which FD investment to make between banks and companies’, here’s what you should know:

Investment’s Security

Your FD investment with a company will be secure when the company achieves its financial targets to provide returns. As for bank FDs, they are safe and come with an insurance cover for up to Rs1 Lakh.


Returns on a company FD are much higher than banks. Returns on a bank FD increase with increase in tenure. The credit rating of a company is indicative of its health and associated risk factor. Most of the companies provide the good rate of interest on FD investment schemes.

Tax Liabilities

Tax is levied on the interest earned off both company and bank FDs. Minimum taxable returns for bank and corporate FDs are Rs.10,000 and Rs.5000 respectively. Interest earned below these values need to be declared as ‘Income from other Sources’ while filing tax returns.


Premature investment withdrawals induce penalty- for banks, it is valued around 1%, while there could be a levy of 2-3% penalty on a company FD.

Read Also: What are the Pros and Cons of Investing in FD

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