Choosing a Good Company deposits Scheme:- Ignore the unrated Company Deposit Schemes. Ignore deposit schemes of little known manufacturing companies. For NBFC s, RBI has made it mandatory to have an A rating to be eligible to accept public deposits, one should go further and look at only AA or AAA schemes. Within a given rating grade, choose the company with a better reputation. Once you decide on a company, next choose the schemes that have given a better return.
Unless you need income regularly, you should prefer cumulative to regular income option since the interest earned automatically gets reinvested at the same coupon rate giving upon better yields. It also gives you a lump-sum amount at one go. It is better to make shorter deposit of around 1 year to 3 years. This way you not only can keep a watch on the company’ s rating and servicing but can also plan to have your money back in case of emergency. Check on the servicing standards of the company. You should not oblige companies that care little about investor services like promptly sending interest warrants or the principal cheque.
Which companies can accept Deposit?
Companies registered under Companies Act 1956, such as:
- Manufacturing Companies.
- Non-Banking Finance Companies.
- Housing Finance Companies.
- Financial Institutions.
- Government Companies.
Up to what limits can a company accept deposit?
A Non-Banking Non-Finance Company (Manufacturing Company) can accept deposit subject to following limits: Up to 10% of aggregate of paid-up share capital and free reserves if the deposits are from shareholders or guaranteed by directors. Otherwise up to 25% of aggregate of paid-up share capital and free reserves.
A Non-Banking Finance Company can accept deposits up to following limits: Equipment Leasing Company can accept four times of its net owned fund. Loan or Investment Company can accept deposit up to one and half time of its net owned funds.