Your portfolio should contain a diversified set of investments for optimal performance. While you would have invested in shares, mutual funds, bonds and bank fixed deposits, company deposits is an investment option that you may have overlooked. Here is why you should consider company deposits as well:
Diversification: Fixed and safe returns in an investment portfolio play a key role in limiting portfolio risk. When you have predictable returns, you can plan for your future accordingly. Company fixed deposits offer you stable returns over a fixed period of time.
Higher rate of returns: Company fixed deposits can offer a higher rate of interest than bank fixed deposits.
Tax benefits: If your annual interest income from a company fixed deposit is less than Rs. 5,000 you do not need to pay any income tax on the returns from your company fixed deposit.
Nomination facility: When you invest in a company fixed deposit you can nominate someone from your family to receive the proceeds of the deposit in case of your death. This cuts down on paperwork and is extremely useful facility for investors.
Flexibility: Company fixed deposits are ideal investments in terms of liquidity. In case of a financial emergency, you can prematurely withdraw money from a company fixed deposit. A minimum lock-in period of 3 months applies. In case of premature withdrawal, the following rules apply:
| Category of Investor | Premature Withdrawal | Interest Payable | Premature Withdrawal | Interest Payable |
|---|---|---|---|---|
| Individual Investor | After 3 months but before 6 months | 4 per cent | After 6 months but before date of maturity | 1 per cent lower than interest on public deposit for period deposit has run. |
| Other Investors | After 3 months but before 6 months | None | After 6 months but before date of maturity | 1 per cent lower than interest on public deposit for period deposit has run. |
Loan against fixed deposits: If you have need for money, you can borrow against your company fixed deposit. This is useful for investors who want to use their deposits as a collateral for business or private purposes. Loans can be taken up to 75 per cent of the deposit.
Company deposits are yet another option that investors should definitely explore; they may offer higher returns than normal bank deposits. PNB Housing Finance Limited offers company fixed deposits and has over two decades of experience in the financial services industry. The company has a network of branches across India.
The company derives its parentage from Punjab National bank and is a renowned name in the market. Company’s fixed deposits are rated FAAA by CRISIL, which is the highest safety rating that the rating agency gives out.
