If you missed NTPC, gear up for PFC tax free bonds

Written on Friday, September 25, 2015
By Kumar Pushpraj

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National Thermal Power Corporation (NTPC) opened its public issue on 23rd Sep and has already been oversubscribed by 6 times. If you have missed it, here is another golden opportunity for you as Power Finance Corporation (PFC) has announced its issue opening date and would be raising a total of 700 Crores. The issue would be opening on 5th October and is scheduled for closure on 9th October but looking at the response of NTPC bonds, this too would get over subscribed the same day or may be within hours. Allotment will be done on the first come, first serve basis.

Face value of these bonds would be Rs. 1000/bond and minimum application has to be 5 bonds (Rs. 5000) either individually or collectively across all series of bonds and in multiple of one bond (Rs. 1000) thereafter. These bonds are proposed to be listed on BSE which makes them an attractive investment option. Like NTPC, PFC would most likely issue the bonds in demat form. As they have been rated AAA by the rating agencies such as ICRA, CRISIL and CARE, trust factor is high. There are close to no risk with investment as PFC is a government entity and hence, your investment is at utmost safety.

Interest Rates for PFC Bonds

Retail investors investing up to 10 lakhs can earn 7.36% (10 Years), 7.52% (15 Years) and 7.60% (20 Years). Same interest rate would apply for HUFs and NRIs.

If your investment is more than 10 lakhs you can earn 7.11 (10 Years), 7.27% (15 Years) and 7.35% (20 Years). This matrix is for HNIs, HUFs, NRIs, Non-Individuals and Corporates.

Category Wise Allocation

QIB: 70 Crore
Corporates: 175 Crore
HNIs: 175 Crore
Retail: 280 Crore

These bonds are completely tax free but capital gains made on selling of tax-free bonds on stock exchanges are taxed at 10%.

Click Here to find out more information on PFC bonds and to know about application procedure. 

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