Corporate FD vs Bank FD: Rates, Safety and Ratings Compared

A bank FD carries less risk because deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank, while a corporate FD from an NBFC or housing finance company usually pays more but has no deposit insurance and is unsecured. As of October 2026, the six corporate issuers compared below pay roughly 0.65 to 1.40 percentage points more than HDFC Bank for a three-year cumulative deposit. That extra rate is payment for taking credit risk: the chance, however small for a highly rated issuer, that the company cannot repay on time. Which one fits depends on how much of your money needs insurance cover and how much credit risk you are willing to carry.

What is the difference between a corporate FD and a bank FD?

Both lock your money for a fixed tenure at a fixed rate. The difference is who borrows it and what protection sits behind it.

• Bank FD: a deposit with a scheduled commercial bank. Banks are regulated by the Reserve Bank of India (RBI) and deposits are covered by DICGC insurance up to ₹5 lakh per depositor per bank, counting principal and interest together.
• Corporate FD: a deposit with a non-banking finance company (NBFC) such as Shriram Finance, Bajaj Finance or Mahindra Finance, or a housing finance company (HFC) such as PNB Housing Finance, LIC Housing Finance or ICICI Home Finance. These deposits are not covered by DICGC. They are unsecured, which means that if the company fails, depositors rank pari passu (equally) with its other unsecured creditors and there is no specific asset set aside to repay them.

You can browse the issuers Sanriya works with on the corporate and bank fixed deposits page.

How do corporate FD rates compare with bank FD rates in October 2026?

The table shows cumulative rates for regular (non-senior) depositors from each issuer's published rate card.

Cumulative FD rates, % p.a., as of October 2026, subject to change

PNB Housing Finance rates are effective 16 October 2026 and Shriram Finance rates are effective 11 October 2026. Shriram also adds 0.05% for women depositors and 0.15% on renewals. Rates change often, so confirm the current card on the issuer's page before booking: see the PNB Housing Finance FD page, the Shriram Finance FD page, the Bajaj Finance FD page and the HDFC Bank FD page.

To put the gap in rupees, a difference of 1.40 percentage points on ₹5,00,000 is roughly ₹7,000 a year before tax and compounding. You can model exact maturity values with the FD calculator.

Is a company fixed deposit safe without DICGC insurance?

"Safe" here means two different things. A bank FD up to ₹5 lakh is insured, so even if the bank fails, DICGC pays that amount. A corporate FD has no such backstop: repayment depends entirely on the issuing company's financial health.

A deposit with a large, well-capitalised, AAA-rated NBFC has historically carried low default risk, while a deposit with a weaker, lower-rated company carries more. Past repayment records say nothing certain about the future, though, and several NBFCs and HFCs in India have defaulted on deposits in the past. The practical question is not "is it safe?" but "how much would it hurt if this one issuer delayed repayment?"

What does an AAA or AA credit rating on an FD actually mean?

A credit rating is a rating agency's opinion of how likely the issuer is to pay interest and principal on time. It is not a promise of repayment and it can change.

• AAA: the highest rating; the agency considers the risk of default to be the lowest among rated instruments.
• AA: high safety, with risk slightly above AAA.
• A and below: adequate to moderate safety, with risk rising as the rating falls.

The word after the slash is the outlook. "Stable" means the agency does not currently expect the rating to move; "Negative" signals a possible downgrade. As examples, PNB Housing Finance carries CARE AAA/Stable and CRISIL AAA/Stable, Shriram Finance is rated AAA/Stable by CARE, CRISIL, ICRA and India Ratings, and Bajaj Finance carries CRISIL AAA/Stable and ICRA AAA(Stable). Ratings are reviewed during a deposit's life, so it is worth checking them again before you renew.

Who regulates NBFC and housing finance company deposits?

The RBI regulates deposit-taking NBFCs. HFC deposits are governed by the RBI, with the National Housing Bank (NHB) continuing to supervise housing finance companies. A deposit-taking NBFC must hold an investment-grade credit rating to accept public deposits, and NBFC deposits can be taken only for tenures between 12 and 60 months. Regulation sets rules on capital, liquidity and conduct, but it does not insure your deposit.

Which FDs pay the highest rates for senior citizens?

Senior citizens (60 and above) receive an extra rate that varies by issuer. Adding the senior premium to the October 2026 cards gives these three-year cumulative rates:

• Shriram Finance: 7.85% + 0.50% = 8.35%
• Bajaj Finance: 7.75% + 0.40% = 8.15%
• Mahindra Finance: 7.40% + 0.35% = 7.75%
• PNB Housing Finance: 7.25% + 0.25% = 7.50%
• HDFC Bank: 6.45% + 0.50% = 6.95%

HDFC Bank's senior premium is the joint-largest in the table, so the gap with corporate issuers narrows slightly for older depositors.

Can you withdraw a corporate FD before maturity?

Yes, but with tighter rules than most bank FDs. Under RBI directions for NBFC deposits, premature withdrawal is not allowed in the first three months, with three exceptions: for an emergency expense, up to half the principal or ₹5 lakh, whichever is lower, can be repaid without interest; for a critical illness, the whole principal can be repaid without interest; and on the depositor's death the deposit is repaid with interest at the contracted rate. After three months, you can usually withdraw, but the issuer pays a reduced rate set out in its terms, which is lower than the rate for the period the deposit actually ran. Banks also charge a penalty on premature closure, but most allow it from the start. Treat corporate FD money as money you will not need before maturity, and keep your emergency fund somewhere more liquid.

How is FD interest taxed and when is TDS deducted in FY 2026-27?

From 1 April 2026, the Income Tax Act, 2025 applies. For FY 2026-27, interest from both bank and corporate FDs is added to your total income and taxed at your slab rate. On a cumulative FD, interest is taxable as it accrues each year, even though you receive it only at maturity.

The issuer deducts tax at source (TDS) when the interest it pays or credits to you in a financial year crosses a threshold. The threshold is higher for senior citizens, and both the thresholds and the TDS rate are set by the Finance Act, so they change with budgets. TDS is deducted at a higher rate if your PAN is not linked to the deposit. If your total income is below the taxable limit, you can submit Form 15G (below age 60) or Form 15H (60 and above) to the issuer at the start of each financial year so TDS is not deducted.

Cumulative or non-cumulative: which payout option fits?

A cumulative FD reinvests interest and pays everything at maturity, so compounding works in your favour and the effective yield is higher. A non-cumulative FD pays interest monthly, quarterly, half-yearly or annually, which suits someone who uses the interest for household expenses. Non-cumulative rates are usually slightly lower, especially for monthly payouts.

How can you spread money across issuers and tenures?

1. Diversify across issuers. Many investors cap the amount with any one corporate issuer, for example at a set share of their fixed-income savings, and keep money above the ₹5 lakh DICGC limit spread across different banks.
2. Ladder across tenures. Split a sum into deposits maturing at, say, one, two, three and five years. Each year a deposit matures, giving you liquidity and a chance to reinvest at the then-current rate.

If you are also weighing market-linked options for the same money, read how debt funds differ from bank fixed deposits. The choice of issuer, tenure and amount stays with you.

How does Sanriya place corporate FDs and how is it paid?

Sanriya Finvest Pvt. Ltd. is an AMFI-registered mutual fund distributor (ARN-193359) based in Pune that also places corporate fixed deposits with issuers. For FDs, Sanriya is paid brokerage by the issuer; for mutual funds, it receives trail commission from fund houses. You pay no separate fee. Details are in the commission disclosure.