FD rate of interest in private firms – What are the risks involved ?

POSTED BY Gagan ON October 30, 2013 9:21 am COMMENTS (3)

Hi, I read somewhere that companies like SHRIRAM TRANSPORT FINANCE CO.LTD , Mahindra and Mahindra Financial Services Ltd and JP ASSOCIATES LTD are offering rate of interest ranging from 10.25 % to 12 % over a 3 year period.

PLease share your views and rate these companies. What is the risk involved ?

3 replies on this article “FD rate of interest in private firms – What are the risks involved ?”

  1. ashalanshu says:

    Dear Gagan, please ask yourself, why a company is paying you a higher interest than market? There should be some logic to pay higher interest. After all companies are not here for charity to give us high interest.

    Thanks

    Ashal

  2. Sumit says:

    Company FD always offers higher interest rate as compared to Bank FDs, the difference in interest rate varies from 1% to 3%. But the company is not going through sound financial condition there could be situations they are unable to payback your principle with interest.

    Know the difference between company FD and bank FD below

    http://www.behealthyinvestor.com/bank-fd-vs-corporate-fd

    Sumit

  3. Ashish Garg says:

    Hi Gagan,

    FD interest rates with private firms are generally higher as compared to the nationalised bank as there is a bit of risk involved. These companies “may” default on paying interest to you. Some of the companies who are doing good / great today may not continue to do so in future and hence there is a risk. But this does not mean that one should completely ignore these FD products.

    If you feel that company in which you are investing has potential and capacity to pay, you can always look investing in these products. I myself had invested in Unitech’s FD about 3 years back and had no problem in terms of getting the interest + principal repaid to me at the end of the tenure.

    Regards,

    Ashish

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