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Company's/Corporations can raise capital by means of issuing Fixed Deposits to investors using the Section 58A of the Indian Companies Act. These deposits will be used by the company to fund its expansion, meet its day to day cash requirements etc. This is just like a regular loan that we may take from any financial institution. The company will make periodic Interest Payment (Usually Once a Year) to all the investors in return for the deposit they made with them. At the end of the deposit tenure the company will re-pay the money deposited to all the investors.
A point to note here is that, these deposits are unsecured. If the company is unable to perform as expected or starts making losses, the interest payments may be skipped and in the worst case, if the company declares bankruptcy, the whole deposited money may be lost.
This is exactly the reason why company fixed deposits offer a higher rate of interest (Usually 2-3% more than Bank FD's) to attract high risk investors who want better returns that what is offered by Banks.
What else can I help you with?
What is a corporate fixed deposit?
A deposit made by investors with corporations for a fixed time period, for a predetermined/agreed upon rate of interest is called a "Corporate Fixed Deposits"
What are some examples of fixed income products available in the market?
Some examples of fixed income products available in the market include government bonds, corporate bonds, certificates of deposit (CDs), and fixed annuities.
Fixed deposit is fixed asset or current assest?
A fixed deposit in the name of a firm is not a fixed asset.
Can you provide examples of fixed income instruments?
Fixed income instruments are investments that pay a fixed amount of income at regular intervals. Examples include government bonds, corporate bonds, certificates of deposit (CDs), and preferred stocks.
Can you provide examples of fixed income securities?
Fixed income securities are investments that pay a fixed amount of interest at regular intervals. Examples include government bonds, corporate bonds, municipal bonds, and certificates of deposit (CDs).
What is Accounting entry of interest on fixed deposits?
fixed deposit A/c dr. to int on fixed deposit
What are some examples of fixed income investments?
Some examples of fixed income investments include government bonds, corporate bonds, certificates of deposit (CDs), and Treasury securities. These investments pay a fixed amount of interest at regular intervals.
How do you write letter for bank fixed deposit?
I want letter for bank fixed deposit
What is the difference between fixed deposit and non convertible debenture?
fixed deposit has its fixed term, but debenture does not have any term. fixed deposit can be invested in eqty,debt or any other , but the debenture is debt only.
What are the differences between a fixed deposit and a certificate of deposit?
A fixed deposit is a type of savings account offered by banks where you deposit a sum of money for a fixed period at a fixed interest rate. A certificate of deposit (CD) is similar but is typically offered by credit unions and has a higher interest rate but requires a minimum deposit and penalties for early withdrawal.
What do you call a portion of a bank's deposit that are not loaned?
fixed deposit
How do you claim fixed deposit?
Every Fixed Deposit will have a certificate linked to it. The bank would issue you a certificate that is the proof that you have a fixed deposit with the bank that is worth 'n' rupees and matures on 'x' date. You need to carry this back to the bank and submit it and ask for cashing your fixed deposit. The bank will accept the certificate and pay you the cash that is due for the deposit.
