Indian Railway Finance Corp (IRFC) is said to be launching its tax-free bond issue worth Rs 4,532 crore on December 8.
It is about 6.5 times the size of earlier issues of tax free bonds from NTPC, PFC and REC, which were of Rs700 crore each. Retail investors got meagre allotment in the earlier issuances due to the smaller size though 40% of the issue size was reserved for them .Typically those who applied for Rs1 lakh, got allotment worth Rs 12,000-15,000 due to heavy subscription.
Being a big issue, the chances of allotment in IRFC are higher. Distributors are urging investors to apply for a slightly higher amount to get their quota. These tax-free bonds will have three tenures — 10 years, 15 years and 20 years.The 10-year bonds for retail investors will carry 7.32%, 15-year bonds will offer 7.53%, while the 20-year bonds will offer 7.5%.
Investors, who want allotment of up to Rs40 lakh, could consider splitting applications across family members of Rs10 lakh each for their applications to be considered in the retail category. This also helps in getting a higher interest as the retail category carries a 0.25% higher interest as compared to the HNI category.
Frequency of Interest Payment: Annual
Minimum Application Size and in multiple there of: 5 bonds , Individually or collectively across all series of bonds and in multiples of 1 bond thereafter.
Face value :Rs.1,000
Issue Price :Rs.1,000
Reset Process: Not Applicable
Coupon Type: Fixed
Coupon Payment Date: First Interest Payment date is on October 15,2016 and subsequently on October - 2015 of every year except the last interest payment along with th redemption amount.