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-

  • Option I – Annual Coupon and Buyback after 5 years
  • Option II – Annual Coupon and No Buyback Option
Redemption/Maturity At par at the end of 10th year from the deemed date of allotment.
Coupon rate
  • Option I (Annual Coupon and Buyback after 5 years) – 8.00% p.a.
  • Option II (Annual Coupon and No Buyback) – 8.10 % p.a.
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.

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Category : Income Tax (25355)
Type : News (12702)

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