Nabard Bhavishya Nirman Bond 2010
The zero-coupon bond from NABARD (National Bank for Agriculture and Rural Development) Bhavishya Nirman Bond is now re-opened from May 10, 2010. This is an assured return scheme from NABARD and hence you will be paid up the assured amount or face value of the bond that was mentioned at the end of the tenure, i.e., 10 years in this case of Bhavishya Nirman Bond 2010.
The issue price of each of these bonds is fixed at Rs. 9500 per bond and has a face value of Rs. 20,000 i.e., you will need to pay Rs. 9500 and you will end up gaining get Rs. 20,000 at the end of the tenure for each of the bond you have brought. The minimum 5 bonds need to purchased by an investor. The NABARD zero coupon bond is now open for public and would be open only for a limited period.
Axis bank is the bankers for NABARD Bhavishya Nirman Bond and UTI Technology Services is the registrar to this year’s issue of May 2010.
Zero-coupon bonds:
These are the bonds which you can buy at the special discounted price of the face value. For example for this year’s Bhavisha Nirman Bond the face value has been set as Rs. 20,000 per bond but you can buy it at issue price of Rs. 9500 per bond and hence the difference of Rs. 10,500 is your return for the investment you make and thus this name zero coupon bond as it does not give you any interest guarantee or coupon rate. Its like you are getting to buy these bonds at the current price instead of its future price which is said forth by NABARD from time to time.
These NABARD Bonds comes with a lock-in period of 10 years and hence you cannot guarantee liquidy or withdraw prematurely. But to facilitate liquidity to these bonds NABARD is going to list these bonds at BSE (Bombay Stock Exchange) and thus you would be able to sell these bonds at the existing market price and thus proving to be a liquid investment for you.
Tax Implications:
There is no tax deduction applicable for the returns from NABARD Bavishya Nirman Bond but the return is considered or treated as the capital gain and thus tax has to be paid by the investors themselves.
Final call:
Although it looks lucrative but the fact remains that the interest rate for such long period of time (i.e., 10 years) is not worthy to put your money locked in for. And also the returns you get after all the capital gains tax deduction is much less than that was quoted and naturally the interest rate is not as you might have imagined for these Nabard Bonds. But the NABARD Bhavishya Nirman Bond 2010 can be ideal for those who cannot digest risk and are looking for assured returns and never mind the huge lock-in period that comes along with it.
You can get the NABARD Bhavishya Nirman Bond application from here and read about its salient features here.
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Is this still open for investments