FMP
Corporates now like FMPs of less than 3-6 months duration
November 27, 2008 by Ganesh
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
[...] Some investors are wary of FMP plans and mutual fund schemes in general, given the global financial environment and the recent bad press that FMPs have received.So, locking in your investments on a 3 year FMP is not advised by these investors who prefer dealing in short term FMPs [...]