NEW FD RATE vs CORPORATE FD RATE
Nowadays we are seeing a continuous drop in the saving rate.
As of 1/4/2020 rates of postal saving like NSC, PPF, MIS, Kissan Vikas Patra are reduced. After Repo rate cut by RBI during CY 2020 made FD rate unattractive.
Repo rate & Reserve repo rate has been reduced continuously, though rates are reduced in FD continuously but not the lending rate. Leading rates are not affected that much.
Now again SBI reduced its FD rate which is equivalent to or less than saving banks' accounts. This phenomenon will continue as govt. & Financial Institution wants cheap money.
If we look at the Govt. The bonds rate, it is the highest in the world.
Our total govt. borrowing is significant due to our population & low tax base.
But it is going to stay here. We cannot ignore it. In the future, we can see some differences.
Then what is the answer for it? Here comes Corporate Fixed Deposit.
It is the same product as that of bank fixed deposits. In banks, we do daily transactions or we visit banks continuously. So everything is visible.
But in the corporate FD, you have to visit the nearest branch or depend on your advisor.
Now rates incorporate FD is comparable to govt. security.
Here you have to check the rating of corporate FD. Which determines its borrowing capacity.
If it is "AAA" & "AA+" which denote the highest security.
If two rating agencies have given the same rating then we can opt for it.
Or few corporate groups are there in the market which has never defaulted on their payment obligations.
Likewise "HDFC Ltd & TATA Group".
You can save money which is hard-earned. Normally rates are like 7% to 8 % depending upon tenure.
Tenure varies from 3 months to 120 months.
Interest payments monthly to cumulative are available.
As some of our corporate never defaulted in payment. You can choose to invest some of your money here.
The nature of corporate business is more with the retail side, your money is safe.
As of 1/4/2020 rates of postal saving like NSC, PPF, MIS, Kissan Vikas Patra are reduced. After Repo rate cut by RBI during CY 2020 made FD rate unattractive.
Repo rate & Reserve repo rate has been reduced continuously, though rates are reduced in FD continuously but not the lending rate. Leading rates are not affected that much.
Now again SBI reduced its FD rate which is equivalent to or less than saving banks' accounts. This phenomenon will continue as govt. & Financial Institution wants cheap money.
If we look at the Govt. The bonds rate, it is the highest in the world.
Our total govt. borrowing is significant due to our population & low tax base.
But it is going to stay here. We cannot ignore it. In the future, we can see some differences.
Then what is the answer for it? Here comes Corporate Fixed Deposit.
It is the same product as that of bank fixed deposits. In banks, we do daily transactions or we visit banks continuously. So everything is visible.
But in the corporate FD, you have to visit the nearest branch or depend on your advisor.
Now rates incorporate FD is comparable to govt. security.
Here you have to check the rating of corporate FD. Which determines its borrowing capacity.
If it is "AAA" & "AA+" which denote the highest security.
If two rating agencies have given the same rating then we can opt for it.
Or few corporate groups are there in the market which has never defaulted on their payment obligations.
Likewise "HDFC Ltd & TATA Group".
You can save money which is hard-earned. Normally rates are like 7% to 8 % depending upon tenure.
Tenure varies from 3 months to 120 months.
Interest payments monthly to cumulative are available.
As some of our corporate never defaulted in payment. You can choose to invest some of your money here.
The nature of corporate business is more with the retail side, your money is safe.
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