NHB Tax Free Bonds to be issued on 30th December

The first Tranche of tax free bonds of National Housing Bank (NHB) is coming out on 30th December 2013. The issue will end on 31st January 2014. The first issue is of Rs 2,100 crores in size and the interest rate is as high as 9.01%. The interest is completely tax free.NHB Tax Free Bonds to be issued on 30th December_1

More about the company

NHB is a subsidiary of the Reserve Bank of India (RBI). NHB has been one of the most successful ventures of the government of India in the recent past.

The company has strong fundamentals and it reported profit after tax (PAT) of Rs. 450 crore with total income of Rs. 3,030 crore for the period ended June 30, 2013 as against Rs. 387 crore and Rs. 2,492 crore respectively for the period ended June 30, 2012.

Its net interest margin (NIM) also improved to 2.25% during this period as against 2.20% last year. Gross NPAs and Net NPAs remained quite close to zero for the periods ended June 30, 2011 and June 30, 2012.

Credit Rating: – ‘AAA’ by CRISIL, CARE, and ICRA

Main Highlights

  • Face value of the NHB bond is Rs 5,000. The minimum investment that can be made is Rs 5,000. The investment can be made in multiple of one bond. Allotment on first come first serve (FCFS) basis.
  • Interest is paid annually and no TDS would be deducted.
  • There is no lock in period but you can’t also cash in the bonds back to the company before its maturity period ends.
  • Retail investors who would apply for bonds more than RS 10 Lakh in investment would get 0.25% less interest than what retail investors would get (as listed in the table). Non retail investor would get interest rate 0.25% less than retail investors.

NHB Tax Free Bonds to be issued on 30th December

How to Apply?

You can apply in Demat form as well as physical form either yourself or through your broker. You can download the bond form from Axis Bank or ICICI Securities etc. For the reason the bonds are listed on NSE, they are highly liquid in nature. Non Resident Indians and Qualified Foreign Investors (QFIs) can’t apply for the bonds.

Should you invest?

The returns from the bonds are on a higher side and tax free too. So, if you are in the higher side of the tax bracket, you must look towards investing in the bonds.

Download prospectus from here

Ashish Pandey

I am a business and finance journalist who is currently employed at Financial Express and previously at Zee News. My areas of interest include business and foreign policy. You can reach me on Twitter at @ashuvirgo1984 or @eFundsPlus.

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