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2 mins Read | 11 Months Ago

5 Reasons Corporate FDs are a Safe Investment

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In a continually evolving economic environment, stability is crucial, and dealing with volatility is something all corporate financial planning should include.Finding a safe and reliable investment option is quintessential. ICICI Bank’s Corporate Fixed Deposits (FDs) are an excellent investment choice for companies looking to build their savings while earning attractive interest on deposits. Despite being a conventional investment option, Corporate FDs are still considered the safest form of investment, providing a predictable and stable return on investment. Corporate FDs are untouched by market volatility and the minimum amount that can be invested is Rs. 10,000 for a minimum tenure of 7 days.

In fact, Corporate FDs generally offer competitive interest rates, which makes them an ideal choice for achieving both short-term and long-term financial goals. Additionally, investing in ICICI Bank’s "CARE AAA" and "ICRA MAAA" rated Corporate FDs can help companies diversify their investment portfolio and gain a competitive edge. Here are five compelling reasons why investing in Corporate FDs is an excellent investment decision for companies.

1. Surplus Funds

When a company has surplus funds, it may choose to invest in Corporate FDs to earn higher returns on its surplus funds. This is a prudent financial decision as it allows a company to earn interest on its surplus funds while keeping them safe and readily available if needed.

When considering investing surplus funds, compare Corporate FDs with other investment options, such as stocks, bonds, or liquid mutual funds. While these investments may offer potentially higher returns, they also come with higher risks. Whereas Corporate FDs provide a safe and secure investment option.

2. Contractual Obligations

Sometimes, companies may have contractual obligations to invest a certain amount of money in fixed-income instruments, such as Corporate FDs. Contractual obligations are a crucial aspect of corporate finance, and they have benefits regarding managing and raising funds for a corporation. In the context of investing a fixed amount and getting a fixed return in Corporate FDs, contractual obligations refer to the legal framework governing your investment's terms and conditions.

When an FD is issued, your corporation enters into a contractual obligation with us, which outlines the terms of the investment. These terms typically include the amount invested, the duration of the FD, the interest rate, and the repayment terms.

That is why having a clear and binding contract is beneficial for the corporation, as it can avoid misunderstandings, disputes, and legal liabilities.

For the corporation, contractual obligations are beneficial as they enable access to funds at a fixed rate of interest, which can be used for various business purposes such as capital investments, expansion, or working capital requirements.

As a legal agreement protects your investment, the terms of the contract guarantee a fixed return. So isn’t it appealing to investors seeking a stable and predictable source of income?

3. Higher Returns

ICICI Bank Corporate FDs offer higher returns making them an attractive investment option for companies looking to earn more from their money. Corporate FDs typically have fixed interest rates, providing callable and non-callable FD interest.

  • Callable FD interest allows you to call back the FD before its maturity, meaning you can terminate it before the agreed-upon maturity date. In this case, the principal amount and the interest (up until the termination point) will be provided.
  • Non-callable FD interest, on the other hand, means that you can't call back the FD before maturity. This means you are guaranteed to receive the agreed-upon interest rate for the entire duration of the FD.

Callable FDs offer lower interest rates than non-callable FDs because they provide greater flexibility and control over cash flows.

4. Safe Investment

Corporate FDs are considered a safe investment option as the creditworthiness of the bank typically backs them. This makes them a low-risk investment option, especially compared to stocks or other equity investments. ICICI Bank’s Corporate FD is a reliable fixed deposit scheme that has received the highest credit rating "CARE AAA" and "ICRA MAAA" ratings from two leading credit rating agencies in India, CARE Ratings and ICRA, respectively.

This indicates that ICICI Bank is well placed with a strong capacity to meet all financial obligations. So investing in an ICICI Bank Corporate FD that is accredited with these ratings is a relatively safe investment option as it indicates a lower risk of default. This higher credit rating ensures your investment is safe and secure.

5. Flexible Tenure

Flexible tenure is an important feature that makes our Corporate Fixed Deposits (FDs) more attractive. ICICI Bank also extends flexible tenures ranging from seven days to ten years for Corporate FDs. This can help you choose the deposit duration that suits your financial goals and needs.

This means you can invest in Corporate FDs for a shorter or longer tenure, depending on your financial goals, liquidity needs, and risk appetite.

As an investor, you can opt for a shorter deposit tenure if you have a short-term financial goal or require liquidity soon. On the other hand, if you have a long-term financial goal, you can choose a longer tenure that may offer a higher interest rate.

You can use the flexibility of tenure in Corporate FDs to ladder your investments, which involves investing in FDs with different tenures. This strategy can help you mitigate the risk of interest rate fluctuations and reinvest your money at regular intervals.

Conclusion

Investing in ICICI Bank’s Corporate FDs can be a wise and fruitful financial decision for companies with surplus funds, contractual obligations, or a preference for safe, high-yield investments.

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