The Industrial Development Bank of India (IDBI) plans to raise Rs 1,000-crore through a retail bond offering in June. This will be the first tranche of the Rs 5,000-crore umbrella bond issue proposed by the financial institution for 1998-99.
The principal amount of the issue is Rs 500 crore. It will have a 100% green shoe option _ implying that excess subscription of up to Rs 500 crore will be retained..
A senior IDBI official said, "IDBI plans to issue four instruments and will enter the retail market after June 15, but before July." It is yet to decide the interest rate structure on the various instruments, the official added.
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IDBI is already in the market with its first private placement issue in the current fiscal. The institution plans to raise Rs 1,000-crore through the issue and is offering an annualised yield of 13.5 per cent for a period of five years.
For the retail issue, it has decided on three instruments _ education bond, regular income bond and tax-free bond. Sources said the institution is contemplating between offering growing interest bond or multi option bond as the fourth instrument.
In case of the education bond, an investor will not receive any interest for a certain period. Subsequently, they shall receive an accumulated sum in five tranches.
The regular income bond will have a five-year tenure and will provide the investor the option of annual, semi-annual or monthly interest payment. The tax-free bond is expected to offer tax rebate under Section 54 EA and 54 EB of the Income-Tax Act.
In case of the growing interest bond, the interest payment will increase every successive year. Under the multi-option bond, investors will have five options from which to choose interest flow.
IDBI has appointed IDBI Investor Services as the registrar to the issue and SBI Capital Markets as the lead manager.
IDBI proposes to offer 10 types of bonds through the umbrella bond issue _ infrastructure, growing interest, deep discount, regular income, floating rate, education, retirement, gift, inflation and multi-option bonds.