Infrastructure bonds (as the name says it) are the bonds issued for funding infrastructure projects. These can be issued by government authorized Infrastructure companies or Non- Banking Financial Companies also.
Features of Infrastructure bonds
They are long-term bonds with a maturity period of 10 years and a lock-in-period of 5 years i.e. after 5 years, investors can take loans against these bonds. These were introduced in 2010 to invest domestic savings towards infrastructure projects. The borrowers can invest with a minimum amount of Rs 5000 and in multiples of 5000 thereafter. These are issued and available in both demat and physical form. These are highly rated bonds with low risk investment options (as mostly issued by government bodies) suitable for retired investors. These are issued with interest rate of 7.5 to 8.25 %.
Generally, middle class investors are interested to invest in these types of bonds as these are tax-deductible. The investor can avail tax benefit up to Rs 20000 in long term infrastructure bonds under Section 80CCF of the Income Tax Act.
- Companies/institutions who issue these Bonds
- Infrastructure Development Finance Company (IDFC)
- India Infrastructure Finance Company Limited (IIFCL)
- Rural Electrification Corporation (REC)
- PTC Financial Services.
These bonds are made available at BSE and NSE for trading after lock-in-period.
