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, 80 CCC and 80 CCD. The Reserve Bank of India vide letter NO. DNBS ND SI NO. 1207 05.18.131/2110?11 dated 17.09.2010 has categorised REC as Infrastructure Finance Company. Resident individuals (Major) and HUF are eligible to get these benefits. The issue of REC under Private Placement of Unsecured Redeemable, Non Convertible Long Term Infrastructure Bonds is now open. Main highlights of the issue are :
Highlights
| Issuer | Rural Electrification Corporation Limited (“the Issuer”) |
| Offering | 1,00,000 Unsecured, Redeemable, Non-Convertible Long Term Infrastructure Bonds of Rs. 5,000/- each aggregating to Rs. 50 Crore with a green-shoe option to retain over-subscription for issuance of additional Infrastructure Bonds |
| Type | Private Placement basis |
| 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 | Rs. 5,000/- per bond |
| Issue Price | At par (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 |
| Options for Subscription | The Bonds are proposed to provide the following options-
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| Redemption/Maturity | At par at the end of 10th year from the deemed date of allotment. |
| Coupon rate |
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| Listing | Proposed to be listed on BSE/NSE or Both |
| Trustee | IDBI Trusteeship Services Limited |
| Depository | National Securities Depository Ltd. and Central Depository Services (India) Ltd. |
| Registrars | Beetal Financial & Computer Services (P) Ltd. |
| Mode of Payment | Interest payment will be made through NECS/At Par Cheque/Demand Drafts |
| 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 |
AVAILABLE OPTIONS FOR INVESTMENT IN INFRASTRUCTURE BONDS
| Options | I Buyback Option after 5 Years (Annual Coupon) |
II No Buyback (Redemption After 10Years) (Annual Coupon) |
| Face Value (Rs.) | 5,000/- | 5,000/- |
| Minimum Application | Two Bonds | Two Bonds |
| In Multiples of | One Bond thereafter | One Bond thereafter |
| Buy Back Option | Yes | No |
| Interest Payment | Yearly | Yearly |
| Coupon | 8.00 % per annum | 8.10 % per annum |
| Coupon Payment Date | 31st March Every Year | 31st March Every Year |
| Maturity Date | 31st March, 2021 | 31st March, 2021 |
| Buy Back after | 5/6/7/8/9 Years | NA |
| Annual Interest Payment and Interest on application money |
The First Annual Interest shall be paid on 31st march, 2012. Interest on application money at the above rate from the date of credit in REC bank account to the date of allotment shall be paid with the first annual Interest Payment. | |
