Know all about non-bank fixed deposits
By Neelima Shankar
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Conservative investors have always preferred bank fixed deposit schemes as a safest investment option. But, at the time when interest rates are falling, banks are the first ones slashing their deposit rates.

The falling bank deposit rates have been a constant worry for the investors but now there are other options available for them. One such option available is fixed deposit schemes offered by non-banking finance companies which offer superior interest rates than banks.

The Reserve Bank of India authorizes the companies to accept money from general public for fixed term and these companies perform the tasks under specified regulations of RBI. There are set of guidelines and instructions from the RBI to all the investors who are willing to invest in NBFCs have to follow. These instructions cam help in protecting a person's interest in investing in these companies.

Features of company fixed deposits:

Term- The term of the company/non-bank fixed deposits schemes are usually less because when it comes to these deposit schemes, the performance of the company and rating may change from time to time depending on different variables. So, as a matter of insecurity, shorter terms are generally preferred by the investors. As per RBI regulations, the term of such schemes cannot be less than 12 months or more than 5 years.

Types of company fixed deposits- There are mainly two types of fixed deposit schemes which falls under the non-bank fixed deposit category and they are cumulative and non-cumulative fixed deposit schemes.

Non Cumulative fixed deposit schemes pays off the interest earned on investment on regular basis i.e. half yearly or annually, so the interest on the investment does not get acquired on principal and investors can earn higher interests.

In the case of Cumulative fixed deposit scheme, the interest accumulates with principal so as to earn higher returns when compared to non-cumulative plan. This scheme pays interest accrued on deposit schemes on maturity of the fixed deposit.

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