Friends,
There are plethora's of options available today where one could park his or her funds so that it grows in beneficial mode. Every individual always has some income left on his disposal after spending a part of the income on his or consumption needs. Now that many of us do not know the right way through which such savings can be made to grow. One such option where investing would earn a handsome returns is bonds. Bonds today are issued by a number of financial institutions. The country’s leading bank SBI too issues bonds which gives their investors favorable returns.
SBI has introduced a Lower Tier 2 bond of retail nature very recently. The issue is open for subscription from February 21, 2011 which has closing date of February 28, 2011.
The maximum amount of interest available under this bond is 9.95% per annum for a period of 15 years. So the rate of return is really favorable. The terms of the bond provides that those who invest in these bonds in bulk i.e. for non retail investors the interest rates are 9.30% for the initial 10 years from the date of the allotment and the interest rate is 9.45% if the tenure if the bond is 15 years. The bond cannot be redeemed before the maturity period or is redeemable only when prior approval of the bank is taken. The face value of the each bond is Rs. 10000 for bonds having a tenure of 10 years and also for bonds having tenure of 15 years.
(Income Tax Slab Rates 2011-12)
The bonds which are to be open for issue has been rated CARE AAA by the credit rating agencies CARE and the CRISIL has rated the bond AAA/STABLE which proves that the bond is a very secured one and one should not be worried about their funds. The important thing to remember in order to subscribe for this bond is that one needs to have a demat account without which one would not be able to apply for such bonds. These bonds should not be misunderstood for the newly issued infrastructure bonds which carry a tax benefit of Rs. 20000 under section 80CCF of the Income Tax Act.
The bonds have been already been listed in the recognized stock exchange of the country- National Stock Exchange and Bombay Stock Exchange so it will be easier for the investor in trading of these bonds once the maturity is reached or even exchanging them in the market. The bond can be redeemed for Rs. 10000 per bond as per the terms of the bond.
The bonds have been already been listed in the recognized stock exchange of the country- National Stock Exchange and Bombay Stock Exchange so it will be easier for the investor in trading of these bonds once the maturity is reached or even exchanging them in the market. The bond can be redeemed for Rs. 10000 per bond as per the terms of the bond.
The bonds that SBI is issuing is of a long term nature which will in turn be invested in long term investment plans so the liquidity of the bonds is constantly maintained. The application forms for the bonds will served on a first come first basis. So those who are planning to invest in such bond should grab it as early as possible and also before the date of closing of issue of the bond. This is a safer option to invest as it is the country’s largest bank providing loans of both short term and long term nature. So it is one of the flexible option to invest your funds.
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