NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT BONDS
NABARD issues bonds to retail investors and institutional buyers from time to time.
DETAILS AND FAQ
NABARD issues bonds from time to time to raise capital for various projects approved by the Government of India. The budget for 2016-17 does not foresee another issue of bonds.
The bonds are normally open for investment only for a few days. Any open issues of NABARD bonds and its details will be listed here when available. Please note that the details of each issue can be different from the previous.
Short note about the organisation:
NABARD is an apex development institution established by a special Act by the Parliament in 1982. Its main focus is the upliftment and development of rural India. Its objective is to facilitate credit and other facilities for the promotion and development of agriculture, small scale industries, cottage and village industries, handicrafts and other rural crafts, and other allied economic activities in rural India. The Government of India holds 99.6% of the share capital and RBI holds the other 0.40%.
Here is an illustration of how the bond works, using details of the last issue:
- Issue open from March 9, 2016 to March 14, 2016
- Total amount raised – ₹3,500 crore, 60% (₹2,100 crore) of which was allotted to retail investors
- Interest offered to retail investors – 7.64% on 15-year bonds and 7.29% on 10-year bonds
- Interest offered to institutional investors – 7.35% on 15-year bonds and 7.04% on 10-year bonds
- Interest is tax free and the investment is eligible for rebate under section 80C of the Income Tax Act
- NABARD has ‘AAA’ rating from CRISIL and the proceeds to be used to finance irrigation projects
- The bonds are listed on BSE after issue and are freely trade-able
- Face value of ₹1,000 per bond and minimum investment of 5 bonds is required
- Allotment is on first-come first-serve basis
- NRIs and Foreign Institutional investors and foreign entities are not eligible to invest
- These instruments are secured, redeemable and non-convertible bonds in the nature of debentures
- The bonds can be held in physical or demat form, but the trading shall be in demat form only