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Factors To be Considered Before Investing In Company Fixed Deposits:


Number of companies accept deposits from general public.Company deposit offers higher interest rates in comparison with bank deposits but with the commensurate risk.

Investors need to look at certain factors before investing in the company deposits:

  1. Credit Rating of deposit: Credit rating companies like Crisil,ICRA offers ratings to deposits from highest AAA to lower.Investors can invest if deposits carry higher rating up to AA+ or max up to AA.Few deposits from manufacturing companies may not carry rating under such case other factors need to be looked.
  2. Why company is raising money: Non-Banking finance companies accepts deposits as they are in the business of lending money.But if any manufacturing company is raising money then investor need to ascertain reason behind raising deposits.Few companies accept deposits after larger acquisitions,bigger deals etc.Depositor need to ascertain the reasons of accepting deposits.
  3. Group Company: If company is part of reputed group then chances of default are lower.E.g Deposits from HDFC,Shriram or Mahindra are relatively safer as these companies are part of reputed groups.
  4. Listing @BSE/NSE: check whether company is listed on stock exchanges or not.Companies need to inform exchanges about financial position time to time and depositor can take view of financial position of listed companyeasily.
  5. Check Market Capitalization: Check market capital of company and compare along with peers.
  6. Profit History & profit trend: Its important to check the profit history of company for at least last 3-5 years.Its also important to check the profit trend.If profit trend is upward then its positive thing for company.
  7. Regular dividends and trend: If company is paying dividends regularly then its positive aspect of company.
  8. Check / google about current happenings about company.
  9. Liquidity: Invest in company deposits only if you are looking to invest surplus money.Premature withdrawal may take 30-40 days and one need to take care of this factor.

Company deposits are not bad at all .One can invest a small part of overall deposits in company deposits but try to check above factors before investing.


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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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