Equity market returns have seen their weakest performance in six years. In this scenario, cautious investors are turning to fixed deposits. But which one should they choose to maximise returns?
Non-banking financial companies (NBFCs) and housing finance companies (HFCs) offer higher interest rates on corporate fixed deposits compared to public sector banks and major private sector banks, largely due to the credit risk associated with them.
“One of the key advantages is the higher interest rates that corporate FDs give compared to traditional bank FDs, often 1–2% more, depending on the company’s credit rating and the duration of the deposit,” said Adhil Shetty, CEO of BankBazaar.com.
How to watch out for risks
A simple way to assess risk is to check credit ratings, which indicate the creditworthiness of NBFCs and HFCs. Lower-rated issuers offer higher returns but carry more risk, while higher-rated ones are considered relatively safer.
When choosing corporate FDs, it is important to check ratings from agencies such as CRISIL, ICRA and CARE. These reflect the financial health of the issuing company, with stronger ratings indicating a lower chance of default and more reliable payouts.
What corporate FDs offer
Higher interest rates: Usually 1–2% above bank FDs, depending on creditworthiness and tenure
Flexible tenures: Ranging from a few months to several years
Low minimum investment: Accessible to a wider set of investors
Diversification: Helps balance risk when combined with other assets
Regular income: Monthly, quarterly or annual interest payout options
How do corporate FD interest rates compare in April 2026?
Here are 10 corporate fixed deposits, according to Paisabazaar:
1. Shriram Finance
Highest rate: 7.60%
Tenure: 3 to 5 years
Rates: 1-year: 7% | 3-year: 7.60% | 5-year: 7.60%
Senior citizen: +0.50%
Rating: AA+ (watch positive), AAA (CARE)
Risk: Moderate (strong but not top-tier across all agencies)
2. Mahindra Finance
Highest rate: 7%
Tenure: 2 to 5 years
Rates: 1-year: 6.60% | 3-year: 7% | 5-year: 7%
Senior citizen: +0.20% to +0.35%
Rating: AAA
Risk: Low (top-rated)
3. Manipal Housing Finance Syndicate Ltd.
Highest rate: 8.25%
Tenure: 1 to 3 years
Rates: 1-year: 8.25% | 3-year: 8.25% | 5-year: 7.75%
Senior citizen: +0.25%
Rating: A
Risk: High (lower rating but higher returns)
4. PNB Housing Finance Ltd.
Highest rate: 6.90%
Tenure: 3 to 5 years
Rates: 1-year: 6.60% | 3-year: 6.90% | 5-year: 6.90%
Senior citizen: +0.25%
Rating: AA+
Risk: Moderate
5. Sundaram Home Finance
Highest rate: 7.15%
Tenure: 4 to 5 years
Rates: 1-year: 6.70% | 3-year: 7% | 5-year: 7.15%
Senior citizen: +0.35% to +0.50%
Rating: AAA
Risk: Low
6. Muthoot Capital Services Ltd.
Highest rate: 8.95%
Tenure: 36 months
Rates: 1-year: 7.90% | 3-year: 8.95% | 5-year: 8.50%
Senior citizen: +0.25%
Rating: A+
Risk: High (higher returns = higher risk)
7. ICICI Home Finance
Highest rate: 7.10%
Tenure: 45 months
Rates: 1-year: 6.75% | 3-year: 6.90% | 5-year: 7%
Senior citizen: +0.35%
Rating: AAA
Risk: Low
8. Can Fin Homes Ltd.
Highest rate: 7.50%
Tenure: 3 years
Rates: 1-year: 6.50% | 3-year: 7.50% | 5-year: 6.75%
Senior citizen: +0.25% to +0.50%
Rating: AAA
Risk: Low
9. Bajaj Finance Ltd.
Highest rate: 6.95%
Tenure: 2 to 5 years
Rates: 1-year: 6.60% | 3-year: 6.95% | 5-year: 6.95%
Senior citizen: +0.35%
Rating: AAA
Risk: Low
10. LIC Housing Finance Ltd.
Highest rate: 6.90%
Tenure: 5 years
Rates: 1-year: 6.70% | 3-year: 6.85% | 5-year: 6.90%
Senior citizen: +0.25%
Rating: AAA
Risk: Low
What are the key takeaways?
Highest returns: Muthoot Capital (8.95%), Manipal Housing (8.25%) — but with higher risk
Safest options: Mahindra, ICICI Home, Bajaj, LIC Housing (AAA-rated)
Tenure sweet spot: 3–5 years gives the best rates across most companies
What risks should investors consider?
While corporate FDs offer higher returns, they also come with risks that investors should weigh carefully.
“The primary concern is credit risk, where the issuing company may default on interest or principal payments if it faces financial issues,” said Shetty. Unlike bank FDs, which are usually insured, corporate FDs do not offer the same level of protection.
Credit risk: The issuer may fail to meet repayment obligations
Liquidity risk: Restrictions or penalties on early withdrawal
Lack of insurance: No deposit cover in case of default
How can investors evaluate corporate FDs?
Investors can assess safety by checking credit ratings assigned by agencies such as CRISIL, ICRA and CARE. These indicate financial stability and repayment ability.
AAA or AA: Low risk, strong repayment capacity
A or BBB: Moderate risk, some exposure to fluctuations
BB or below: Higher risk, greater chance of default
Credit ratings offer a useful guide, but investors should also review the company’s financial position before investing.
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