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Bonds and Debentures

Bonds and Debentures of rated Companies are retail borrowings made by the companies backed by securities of their assets either existing or new ones acquired out of the borrowings. A merchant banker or a banker is appointed as a trustee to take care of the interests of the Bond Holders. Secured Bond/Debenture holders shall have first charge on the assets secured to the Bonds/Debentures issued. These bonds/debentures are repayable after a medium to long term and carry interest payable either periodically or compounded and paid on maturity.
These carry a lower risk but with a steady higher income compared to the savings/deposit schemes of banks and govt. backed small savings schemes.

Government of India, vide notification dated July 9, 2010 permitted IFCI, IDFC, LIC and Infrastructure Finance Companies to issue Long Term Infrastructure Bonds where subscription up to Rs.20,000/‐  provides tax benefits u/s 80 CCF of the Income Tax Act 1061 over and above the Rupees One Lakh limit already available u/s 80C, 80CCC and 80 CCD. 

 

Issuer

Rural Electrification Corporation Limited

Instrument

Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds with benefits under section 80CCF of the Income Tax, 1961

Rating

‘AAA /Stable’ by CRISIL, ‘CARE AAA’ by CARE ,’LAAA’ by ICRA, ‘AAA(IND) by Fitch

Eligible Investors

Resident Indian Individual (Major) and HUF through Karta of the HUF

Security

Unsecured

Face Value / Issue Price

Rs. 5,000/- per bond

Minimum  Subscription

Rs. 10,000/- (2 Bonds × Rs. 5000) and in multiples of 1 Bond thereafter

Tenure

10 years, with or without buyback option after five years

Redemption/Maturity

At par at the end of 10th year from the deemed date of allotment

Coupon rate

Option I (Annual Coupon &  Buyback after 5 years)–8.00% p.a.       Option II (Annual Coupon and No Buyback) – 8.10 % p.a.

Issuance

Demat and Physical Form

Trading

Demat mode only)

Issue Open Date

January 12 ,2011

Issue Close Date

March 28, 2011 (The issuer would have an option to pre-close the issue by giving 1 day notice to the Arrangers)

Deemed Date of Allotment

31st March, 2011