Demand for corporate FDs, RBI bonds soars

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Demand for corporate FDs, RBI bonds soars

  • A sharp fall in stock prices due to geopolitical tensions, along with high volatility is driving retail investors.

Corporate FDs

  • Several companies and NBFCs are also allowed to collect deposits for a fixed tenure at a prescribed interest rate, Such deposits are called corporate Fixed Deposits.
  • It comes with the assurance of guaranteed returns and flexibility of choosing the tenure.
  • Corporate FDs provide a higher interest rate than bank FDs.
  • Fixed corporate deposits could give returns of 6.25-7.15%, depending on the tenure chosen and the rating of the company.
  • Senior citizens get 25 bps extra.

RBI bonds

  • RBI Bonds are issued by the Government of India and are eligible to be held by the citizens of the country.
  • One can purchase rbi bonds through sbi and 12 nationalized banks, 4 private banks and Stock Holding Corporation of India Limited.
  • Features of RBI Bonds
  1. The investor should be a resident of the country (India).
  2. The investor can be a major investing the bond in his/her name or a major investing the bond on behalf of a minor’s name.
  3. He/She should be able to afford the investment in individual or joint capacity.
  4. The investor could also be a Hindu undivided family.
  5. Non-Residents of India or NRIs are not eligible to invest in such bonds.

Current Scenario

  • Many investors who like assured returns are buying corporate fixed deposits and floating rate bonds.
  • There is a 50-60% increase in transactions in corporate deposits.
  • Sharp volatility and the downward movement in the market have unnerved many investors.
  • Fears of imminent rate hikes led to bond yields hardening by 60 basis points over the last one year.
  • It is leading to mark-to-market losses for investors.


  • Investors must spread their investments across companies in the corporate deposit space.
  • An AAA-rated company should be the priority.
  • Do not invest more than 10% of your portfolio in a single company.