Thursday, December 18, 2008

NABARD Rural Bonds

nabard rural bonds With Rural Bonds, NABARD strengthens its commitment to rural
India. Invest in Rural Bonds and get risk free returns of 8.25% (8.75% for Senior Citizens) along with Tax advantage under section 80(C) of IT Act, 1961.





TERMS OF THE BOND
1.Face Value: Each bond has a face value of Rs.1,000/-.

2.Tenure of Bond: The bonds will be issued for a tenure of 5 years from the deemed date of allotment. The lock in period for the bonds will be 5 years.

3.Minimum and Maximum Investment: The minimum investment under NABARD Rural Bonds shall be five bonds i.e. Rs.5,000/- and thereafter in multiples of one bond i.e. Rs.1,000/-. There is no limit on maximum investment. However as per Section 80 (C) of the Income Tax Act 1961, the maximum amount eligible for tax deduction is Rs.1,00,000/- during the previous year.

Interest payment will be made annually or cumulatively by way of warrants or through ECS as the case may be. In the case of cumulative option, interest will be calculated on cumulative basis and will be paid alongwith the maturity proceeds. The first interest payment will be made on 31 July for the broken
period i.e. from deemed date of allotment to 30 July and annual interest payments will be made on 31 July each year.

OTHER TERMS
1.Terms of Payment: The full amount of face value of the Rural Bonds applied should be paid along with the application.

2.Interest on application money: Applicants will be paid interest on their application money at 5% from the date of realisation of application money upto one day prior to the deemed date of allotment and will be sent to the investor by way of a warrant along with the first interest payment.

3.Investment holding: Investment in bonds may be held either in “Physical Form” or in “DEMAT Form”. One consolidated certificate will be issued against each application, wherever the bond is issued in physical form.

4.Instructions for payment of application money: Payment may be made by way of cheques / demand drafts drawn on any bank, which is situated at and is a member or sub-member of the Bankers clearing house located at the bank collection centre where the application form is submitted. Outstation cheques/bank drafts or cheques/bank drafts drawn on a bank not participating in the clearing process will not be accepted. Money orders / postal order will also not be accepted. Charges for the bank draft are to be borne by the investor and should not be deducted from the amount payable on application. All cheques / drafts must be made payable to “NABARD” and crossed “A/c Payee only”.

5.Submission of completed application forms: Application, duly completed and accompanied by cheque / demand draft must be lodged with NABARD offices or the Banker to the Issue or their designated branches as mentioned in the application form.

6.Acknowledgements: No separate receipt will be issued for the application money. However, the bankers to the issue or their approved collecting branches and the collection centres receiving the duly completed application form will acknowledge
receipt of the application by stamping and returning to the applicant the acknowledgement slip at the bottom of each application form.

OUR VIEW:
This is a good investment opportunity considering that it is risk free. For Senior citizens who wants to play it safe, this is a good investment. For others, FDs are returning 9.5%+ interest rate for 5+ years and get the same tax benefit under 80(C). So, they can consider Bank FDs but they are not totally risk free.


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