The Role of Fixed Deposits in Corporate Financial Planning

Disclaimer: Ujjivan Small Finance Bank does not provide Corporate FDs. This blog is for generic information only.

July 21, 2025

the-role-of-fixed-deposits-in-corporate-financial-planning

When it comes to corporate financial planning, one key aspect that businesses and organisations need to consider is how to maximise their returns on surplus funds. While there are various investment options available, fixed deposits (FDs) are often a popular choice due to their guaranteed returns and flexibility. 

 

In this article, we will delve into the key features of fixed deposits in corporate financial planning and explore how businesses can effectively incorporate fixed deposits into their financial strategies.

 

Key Features of Corporate Fixed Deposits 

Corporate fixed deposits have several distinct features that set them apart from traditional fixed deposits. Let's take a closer look at these features: 

  • Higher Interest Rates: Corporate FDs generally offer higher interest rates compared to traditional fixed deposits. This allows businesses to earn greater returns on their business investment. 
  • Flexible Tenures: Unlike traditional fixed deposits, corporate deposits offer flexible tenure options ranging from a few months to several years. Businesses can choose a tenure that aligns with their specific financial goals and investment strategies. 
  • Regular Income: Corporate FDs provide periodic payouts of interest, offering businesses a regular income stream. These payouts can be monthly, quarterly, half-yearly, or annually. 
  • Capital Safety: Corporate deposits offer guaranteed returns of both principal and interest. This ensures that businesses can protect their capital while earning stable returns. 
  • Liquidity: In certain cases, businesses can make premature withdrawals from their corporate FDs, albeit with a penalty. Additionally, these deposits can be used as collateral to obtain loans. 

 

Incorporating Fixed Deposits into Corporate Financial Planning 

Let’s explore how businesses can effectively incorporate fixed deposits into their financial planning strategies and develop a robust corporate FD strategy.

  • Assessing Financial Goals: Before investing in fixed deposits, businesses should assess their financial goals and determine the amount of surplus funds available for investment. This evaluation will help them determine the appropriate investment amount and tenure for their FDs. 
  • Diversification: While fixed deposits offer stability and guaranteed returns, businesses should also consider diversifying their investment portfolio to mitigate risk. By allocating funds to different asset classes such as equities, bonds, and mutual funds, businesses can achieve a balanced approach to financial planning. 
  • Tax Considerations: Businesses should also consider the tax implications of investing in fixed deposits. The interest earned on corporate FDs is fully taxable as per the investor's tax slab. It is crucial to account for these taxes while calculating the overall returns. 
  • Reviewing and Renewing: As with any investment, it is essential for businesses to review their fixed deposits periodically and renew them if required. This allows them to take advantage of better interest rates or explore other investment options that may align with their changing financial goals. 

 

Example Scenarios 

To illustrate the role of fixed deposits in corporate financial planning, let's consider a few hypothetical scenarios: 

 

Scenario 1: Cash Flow Management 

A manufacturing company receives a large order and needs to purchase raw materials to fulfil it. However, the payment from the client will be received only after three months. To bridge this cash flow gap, the company can invest its surplus funds in a corporate fixed deposit for three months. The interest earned during this period can help cover the expenses related to raw material procurement. 

 

Scenario 2: Capital Preservation 

A startup has recently secured funding and wants to preserve its capital while earning stable returns. The business decides to invest a portion of its surplus funds in corporate fixed deposits with a higher interest rate compared to regular savings accounts. This ensures that the startup can generate additional income without taking on unnecessary risks. 

Final Thoughts

Fixed deposits play a crucial role in corporate financial planning by offering higher returns, flexible tenures, regular income, capital safety, and liquidity. Incorporating corporate FDs into financial planning strategies can help businesses achieve their short-term and long-term goals while preserving capital and ensuring stable returns.

 

Looking to grow your savings faster? Ujjivan SFB offers a wide range of fixed deposit products. Select the FD of your choice and take a step forward to your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.

 

Disclaimer:

The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.

 

Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk.  Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.

 

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FAQs

1. How often can I receive interest payouts from a corporate fixed deposit?

Interest payouts can be received monthly, quarterly, half-yearly, or annually depending on the terms chosen at the time of investment.

2. Can I nominate someone for my corporate fixed deposit?

Yes, you can nominate someone to receive the maturity amount in case of your demise. 

3. Can I renew my corporate fixed deposit automatically?

Renewal options vary across banks, so it is important to check the terms and conditions at the time of investment. 

4. Are corporate fixed deposits taxable?

Yes, the interest earned from corporate fixed deposits is fully taxable as per the investor's tax slab. 

5. Can I take a loan against my corporate fixed deposit?

Yes, you can use your corporate FD as collateral to obtain loans from banks. 

6. How can I keep track of my corporate fixed deposits?

Most banks provide investors with online portals or access to their customer service helpline to keep track of their fixed deposits' status and maturity dates.

7. Is there a penalty for breaking a corporate fixed deposit before maturity?

If allowed by the terms and conditions of the deposit, breaking a corporate fixed deposit before maturity may attract penalties such as a reduction in interest rate or loss of interest.

8. Are corporate fixed deposit rates higher than traditional FD rates?

Yes, corporate fixed deposit rates are generally higher than traditional fixed deposit rates, offering businesses the opportunity to earn higher returns on their investments. 

9. Can HUFs invest in corporate fixed deposits?

Yes, Hindu Undivided Families (HUFs) are permitted to invest in corporate fixed deposits along with other eligible investors.

10. What is the minimum investment amount for a corporate fixed deposit?

The minimum investment amount for a corporate fixed deposit varies across banks. 

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