Corporates now like FMPs of less than 3-6 months duration

November 27, 2008 by  

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Short Term FMPs are now getting more popular than longer term FMPs among corporates

Corporates are now preferring to invest in short term FMPs, showing a marked disinclination to invest in longer term fixed maturity plans

Corporates are playing it safe by investing in FMPs with shorter durations of typically less than 3 months

FMPs are still an important part of the Indian corporates’ investment plans

Recent fears about Fixed Maturity Plans have not dimmed the preference of corporates to invest in FMPs possibly drawn by the superior tax benefits of FMPs compared to FDs

However, corporates are now more careful about longer term FMPs , given the recent liquidity scare that mutual funds faced in October this year

Possibly, the easing of liquidity in November has led to corporates continuing their investments in FMPs

FMPs , at least of the shorter term duration, are the flavour of the month, probably due to the easing of liquidity in Mutual Funds and a gradual return of confidence to at least the FMPs of the better managed mutual funds

In summary, FMPs are back in the short term investment portfolio of corporates

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