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Parameters to review Corporate FD

Parameters to review Corporate FD

Rating Scale For Fixed Deposits—Fixed deposit rating- CRISIL

SymbolsRatings Definition
FAAA 
(“F Triple A”) Highest Safety
This rating indicates that the degree of safety regarding timely payment of interest and principal is very strong.
FAA  (“F Double A”) High Safety This rating indicates that the degree of safety regarding timely payment of interest and principal is strong. However, the relative degree of safety is not as high as for fixed deposits with ‘FAAA’ ratings.
FA  (Adequate Safety) This rating indicates that the degree of safety regarding timely payment of interest and principal is satisfactory. Changes in circumstances can affect such issues more than those in the higher rated categories.

A corporate fixed deposit offers a much higher return than a bank FD.
Key parameters to review the corporate fixed deposit before making your investment:

  • Strong goodwill and track record of issuer company.
  • Profit earning company with a continuous dividend paying track record
  • Credit rating (rating agencies such as CRISIL, ICRA etc)
    Ratings greatly aid in understanding the financial health of the company offering the fixed deposit scheme.
    It allows the depositor with the assurance of making a comparative analysis amongst the various players in the market. Thus, ratings are considered an important benchmark for pricing as well as trading of debt instruments.

As a thumb rule, investors should invest only in a company having AAA rating.

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