ICICI has decided to offer 14 per cent annualised return for a term of seven years for its forthcoming retail issue as against 14 per cent offered for five years in its previous retail issue.
This is the third series of ICICI's Safety Bonds issue which is slated to open for subscription on August 27 and close on September 10. ICICI yesterday received clearance from Registrar of Companies for the third series of Safety Bonds.
"There are two added features in this series of Safety Bonds -- a new instrument, encashment bond, has been introduced and ICICI has received approval from the Central Board of Direct Taxes for exemption under Section 88 of Income Tax Act," sources said.
The four instruments offered by ICICI include regular income, tax saving, money multiplier and encashment bond for which the FI has tied-up with ICICI Bank.
In case of encash bonds, bondholders can get their bonds encashed anytime after a lock in period of one year from any of the ICICI Bank branches.
The instrument has maturity of seven years, face value of Rs 5000 and at the end of maturity it would give return of 14 per cent.
The regular income bond has a maturity of seven years and offers 14 per cent on annualised basis, 12.50 per cent on semi-annual basis and 13.25 per cent on monthly basis.
The money multiplier bond will provide a return of 13.30 per cent and has three options.
An investment of Rs 4000 will be accumulated to Rs 6000 at the end of three years and three month with the yield of 13.3 per cent. The same amount if invested for ten years and seven months would accumulate to Rs 16,000 and at the yield of 14 per cent. However if it is invested for period of 24 years and three months, the return would be a sum of Rs 1 lakh and at the yield of 14.2 per cent.
The tax saving scheme provides tax relief under Section 88 Section 54EA and 54EB of IT Act of Income Tax Act.
In case the investment is done to get tax relief under Section 88, ICICI will offer coupon of 12.5 per cent.
An investment under the Section 54EA and 54EB of IT Act will provide return of 12. 5 per cent and 13 per cent. In case of tax exemption under section 54A lock in period is three years while 54B will require lock in period of seven years.
Meanwhile, Industrial Development Bank of India (IDBI) has decided to postponed its retail bond issue to September. The FI would raise resources by offering two tranches of Rs 1000 crore each with a greenshoe option of another Rs 1000 crore.
