Best Investment Options

Latest Resident/ NRO Bank Fixed Deposit Interest Rates - As of 12th February, 2012

2012-02-12T19:03:00.000+05:30

Not much changes happening with interest rates since the last fixed deposit post. Interest rates are inching 10% mark for normal citizens but have almost peaked. For senior citizens, it is already 10%+ and have become attractive even for 4-5 years as it is expected to start coming down in few months. For Senior Citizens, there is additional 0.25% to 1% more depending on the bank. Comparison of Latest Resident/NRO Bank Fixed Deposit Interest Rates - As of 12th February, 2012:

Bank	6 months	1 year	2 year	3 year	4 year	5 year
Bank	6 months	1 year	2 year	3 year	4 year	5 year
HSBC	8.00%	9.00%	8.00%	8.50%	8.50%	8.00%
ICICI	7.75%	9.25%	9.25%	9.25%	8.75%	8.75%
HDFC	7.75%	9.25%	9.25%	9.25%	9.25%	9.25%
Axis	7.50%	9.40%	9.40%	9.50%	9.50%	9.50%
IDBI	9.00%	9.50%	9.50%	9.50%	9.50%	9.50%
Barclays	8.00%	8.25%	9.00%	9.25%	9.25%	9.25%
PNB	8.00%	9.25%	9.25%	9.50%	9.25%	9.25%
BOI	8.00%	9.00%	9.25%	9.00%	8.50%	8.75%
Oriental	9.00%	9.75%	9.75%	9.25%	9.25%	9.25%
Canara	8.10%	9.25%	9.25%	9.25%	9.00%	9.25%
SBI	7.00%	9.25%	9.25%	9.25%	9.25%	9.25%
Dena	8.00%	9.60%	9.50%	9.50%	9.30%	9.30%
Citibank	8.25%	9.00%	8.75%	8.75%	8.75%	8.75%
IndusInd	8.50%	9.50%	9.00%	9.50%	8.75%	8.75%
Yes	8.50%	9.00%	9.60%	9.00%	8.75%	8.75%

HUDCO Tax Free Bonds

2012-01-30T20:37:00.000+05:30

Housing and Urban Development Corporation (HUDCO) has come out with an issue of tax free bonds with a face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961 aggregating to Rs 2,000 crore with an option to retain an oversubscription of up to Rs 4,684 crore.

The issue will open on January 27, 2012, and will close on February 6, 2012, or earlier, or may be extended by such period, upto a period of 30 days from the date of opening of the issue, as may be decided by the board of the company or by a duly constituted committee.

The bonds carry a coupon rate of 8.10% for Tranche-I Series 1 Bonds and 8.20% for Tranche-I Series 2 Bonds on per annum basis. Additional coupon rate of 0.12% per annum for Tranche-I Series 1 Bonds and 0.15% per annum for Tranche-I Series 2 Bonds shall be payable to the allottees under Category III (retail investors investing less than Rs 5 Lakh) which will aggregate to coupon rates of 8.22% and 8.35% respectively. However, the aforesaid additional interest of 0.12% p.a. and 0.15% p.a. shall only be available to the original allottees of the bonds under Category III, and shall not be available to the bondholders of such bonds under certain instances.

The Tranche-I Series 1 bonds and Tranche-I Series 2 bonds can be redeemed after 10 years and 15 years respectively from the deemed date of allotment. The bonds can be issued in both DEMAT and physical form but trading can happen only in DEMAT form.

The minimum application size is 10 bonds and in multiples of 1 bond thereafter. The Tranche-I Bonds have been rated 'CARE AA+' by CARE indicating high degree of safety for timely servicing of financial obligations & carry very low credit risk and 'FITCH AA+ (ind)' by FITCH indicating Outlook on National long-term rating is stable.

The lead managers to the issue are Enam Securities Private Limited and SBI Capital Markets Limited. The debenture trustee to the issue is SBICAP Trustee Company Limited.

IRFC Tax Free Bonds

2012-01-23T21:55:00.001+05:30

IRFC, Indian Railway Finance Corporation Limited, a Government of India undertaking has come out with an issue of tax free secured redeemable non-convertible bonds aggregating to Rs 5200 crore. This comes after NHAI and PFC came out with similar bond issues late last year. The interest income arising out of these bonds are totally exempt from tax as per provisions under Section 10 (15) of IT Act.

IRFC is the financing arm of Ministry of Railways with the sole objective of raising funds from the market to part finance the plan outlay of Indian Railways. The funds raised are used for meeting development needs of Indian Railway and other Ministry of Railway entities.

The issue shall open from 27 January, 2012 and shall close on 10 February, 2012. 45% of the issue is reserved for QIBs, 25% for HNIs and 30% for retail investors (investment amount less than Rs 5 Lacs).

2 options:
1. 10 year bond: 8% interest rate for QIBs and HNIs and 8.15% for retail investors.
2. 15 year bond: 8.1% interest rate for QIBs and HNIs and 8.3% for retail investors.

If retail investor sell the bonds during the lifetime of the bond, then it will start carrying a lower coupon or interest rate applicable to other categories.

The bonds will be alloted on a first come first serve basis and can be issued both in DMAT as well as physical form. The bond will get listed on both BSE and NSE.

During FY11, IRFC's total income witnessed a growth of 10.27% to Rs 3492 crore. Profit After Tax (PAT) increased by 9.6% to Rs 485 crore for FY11. In Q1FY12, IRFC's PAT was Rs 104 crore on total operating income of Rs 1073 crore.

IRFC bonds have been rated AAA by CRISIL, CARE and ICRA indicating highly stable investment. The interest rate for 10 year bond is 0.1% less than NHAI and PFC and same for 15 year bond. However, both NHAI and PFC issue have closed, so would recommend investors to invest some part of their fixed income portfolio in this issue (especially those who are in 30% tax bracket).

L&T 80ccf Tax Saving Infrastructure Bonds (Tranche 2) 2011-2012

2012-01-10T21:29:00.000+05:30

L&T has come out with the second tranche of tax saving infrastructure bonds issue which can help investors save tax up to Rs 20,000 under section 80ccf. This is an additional tax saving option that was introduced by government over and above Rs 1 lakh limit under section 80c.

L&T Infrastructure tax saving bonds 2012A issue opens from 10 January, 2012 and shall close on 11 February, 2012.

The investors will get an interest rate of 8.7% per annum. There are 2 options avaialable:
- Non-Cumulative: The interest rate will be paid annually
- Cumulative: The interest will be reinvested and paid at the time of maturity giving better return

The minimum application is 5 bonds and each bond costs Rs 1000 each. The bonds mature in 10 years but can be sold after 5 years lock-in on BSE where they will be listed.

CARE and ICRA has assigned AA+ ratings to these bonds.

These Infrastructure Bonds 2012A Series is the second in the series for this financial year from L&T after they came out with the first one in November, 2011. Both IDFC and L&T are offering lower interest rate on their second tranche issue. So, it is better to invest in REC which is offering higher interest rate.

IDFC 80CCF Tax Saving Infrastructure Bonds (Tranche 2) 2011-2012

2012-01-10T21:16:00.000+05:30

IDFC has come out with the second tranche of tax saving long term infrastructure bonds. IDFC came out with the first tranche in November, 2011 and offered higher interest rate than the second tranche. Investors will get tax benefit on Rs 20,000 under Section 80ccf. This is additional tax benefit over Rs 1 Lac under Section 80c.

The issue shall open on 11 January and shall close on 25 February, 2012.

IDFC offers 8.70% interest rate with two options:

- Annual in which interest will be paid annually
- Cumulative in which interest will be paid along with principal at maturity

Maturity period is 10 years with buyback option after 5 years. Both ICRA and Fitch have rated these bonds as AAA.

REC is offering higher interest rate for similar tax saving infrastructure bonds, so investors can invest in that issue instead of this one.

Best Bank NRE Interest Rates

2012-01-07T14:50:00.000+05:30

Due to rupee depreciation, RBI deregulated NRE interest rates at the end of last year 2011 which allowed banks to set their own interest rates like they do for domestic or NRO savings account interest rates.

This has led to a huge jump in the NRE interest rates which will definitely attract more investment from NRIs who will want to take benefit of high interest rates in India compared to 2-4% in other parts of the world. To make it even more attractive, the interest is tax free as well.

Bank	Tenure	Interest Rate
Karur Vysya Bank	1 year to 2 years	10.00%
City Union Bank	1 year and less than 3 years	10.00%
Tamil Nadu Mercantile Bank	1 year – less than 2 years	10.00%
Karnataka Bank	1 year to less than 2 years	9.75%
Dena Bank	1 year only	9.60%
IDBI Bank	1 year 1 day – 10 years	9.50%
State Bank of Travancore	1 year to less than 2 years	9.50%
South Indian Bank	1 year to 2 years	9.50%
Corporation Bank	1 year to less than 2 years	9.50%
J&K Bank	2 years to less than 5 years	9.50%
Federal Bank	1 year only	9.50%
Indian Bank	1 year to less than 3 years	9.50%
Andhra Bank	1 year	9.40%
SBI	1 year – 10 years	9.25%
ICICI Bank	390 / 590 / 990 days	9.25%
HDFC Bank	1 year 16 days	9.25%
Central Bank of India	1 year to less than 2 years	9.25%
Vijaya Bank	1 year to less than 2 years	9.25%
Bank of Baroda	1 year to less than 2 years	9.25%

SREF 80CCF Tax Saving Infrastructure Bonds 2011-2012

2012-01-07T13:46:00.001+05:30

With the financial year coming to a close, lot of companies are coming up with infrastructure bonds which can help save tax on Rs 20000 under section 80ccf. SREI Infrastructure Finance Ltd has come out with infrastructure bond issue with a tenor of 10 years and 15 years with a face value of Rs 1000 per bond.

The issue opens on 31st December 2011 and shall close on January 31 2012.

There are four options available:
1. 8.90% interest rate with annual interest payment and a tenor of 10 years.
2. 8.90% interest rate with cumulative interest payment at the time of maturity and a tenor of 10 years.
3. 9.15% interest rate with annual interest payment and a tenor of 15 years.
4. 9.15% interest rate with cumulative interest payment at the time of maturity and a tenor of 15 years.

For all four options, the buyback period is 5 years.

The bond issue has got a rating of CARE AA from CARE which indicates a high degree of safety but is lower than other bond issues of IFCI, PFC, REC etc.

For investors interested in this bond issue, it makes sense to prefer the 15 year series over the 10 year one, take advantage of the extra rate of interest and then exercise buyback at the end of 5 years.

PFC Tax Free Bonds

2011-12-29T20:21:00.000+05:30

Following NHAI, Power Finance Corporation (PFC), a leading power sector lender has also come out with tax free bonds to raise up to Rs 1,000 crore. The company provides project term loans, equipment lease financing and short term loans for power projects, among others. The company has the approval to mop up Rs 5,000 crore through issue of tax-free bonds. It has raised Rs 967 crore already through private placement of these bonds in October and November.

The offer will open on 30th December, 2011 and will close on 16th January, 2012.

The 10 year and 15 year bonds carry coupon rates of 8.20 per cent and 8.30 per cent, respectively.

The proceeds of the issue will be used for funding power projects.

PFC also has the regulatory approval for USD 1 billion (about Rs 4,900 crore) Medium Term Note (MTN) programme that would tap international bond market. PFC expects to raise around Rs 30,000 crore in the current fiscal. More than half of the target amount is estimated to have already been raised.

This is a very similar issue to the NHAI and offers similar safety and return.

Goodwill Hospital IPO - Analysis, Subscription, Allotment, Listing, Recommendation

2011-12-28T06:30:00.000+05:30

Goodwill Hospital and Research Centre has come out with an IPO of Rs 62 crore. The company is also offering one detachable warrant per equity share. The company is engaged in running a multi-specialty hospital at Noida called Ojjus Medicare, focusing on core areas such as neurology and neuro surgery, cardiology and cardiac surgery with emphasis on joint replacements and sports injuries. It also provides other services like pediatrics, diagnostic, critical care medicine, oncology, dermatology etc.

The IPO opens on 30th December, 2011 and closes on 9th January, 2012. The company has fixed a price band of Rs 175 to Rs 185 per share.

The company intends to use proceeds of the issue for setting up of diagnostic center at Faridabad (with an outlay of Rs 16.22 crore), establishment of six polyclinics (with cost of Rs 33.97 crore) and repayment of loans (of Rs 10 crore).

Goodwill Hospital reported a net profit of Rs 4.33 crore on total income of Rs 16.08 crore in the quarter ended June 30, 2011. For the financial year ended on March 31, 2011, company posted a net profit of Rs 15.72 crore and total income of Rs 53.58 crore, an increase of 471.6% and 134% over previous year, respectively.

SPA Merchant Bankers Ltd is the book running lead manager of the issue. Beetal Financial and Computer Services Pvt Ltd is the registrar of the issue.

No new IPO issues were announced in the last 2 months because of weakening stock markets. Most of the IPOs had bad run in 2011. This IPO issue opens on 30th December - the last working day of the year.

Recommendation:
CARE has assigned grade 3 to the IPO which indicates stable investment. The track record of SPA Merchant Bankers, lead manager of the issue is not so great as all of their IPOs are trading at a discount to the listing price when compared with the current price of the stock. The valuations of this IPO also appears to be high so we would not recommend this IPO to investors.

Subscription:
Goodwill Hospital IPO has got withdrawn due to poor response from investors.

At the close of the IPO,
QII segment did not get subscribed at all
NII segment got subscribed by 0.02 times
Retail segment got subscribed by 0.01 times

REC 80CCF Tax Saving Infrastructure Bonds 2011-2012: Review

2011-12-27T18:43:00.000+05:30

Rural Electrification Corporation (REC) has also come out with an issue of long term infrastructure bonds which helps save tax on an investment of Rs 20000 under Section 80ccf. The face value of each bond is Rs 5000.

The issue opens on 19th December, 2011 and shall close on 10th February, 2012.

There are 4 options:
1. Interest Rate of 8.95% with maturity at 10 years and buyback option after 5 years. Interest will be calculated cumulatively and will be paid along with the principal.
2. Interest Rate of 8.95% with maturity at 10 years and buyback option after 5 years. Interest will be calculated and paid annually.
3. Interest Rate of 9.15% with maturity at 15 years and buyback option after 7 years. Interest will be calculated cumulatively and will be paid along with the principal.
4. Interest Rate of 9.15% with maturity at 15 years and buyback option after 7 years. Interest will be calculated and paid annually.

IFCI is another infrastructure bond issue which is open right now and is offering slightly higher interest rate than REC. Though the difference in interest rate is not that much so one can choose any one between these two options and get a tax benefit on Rs 20,000 under Section 80ccf.

Muthoot Finance NCD Issue

2011-12-27T08:26:00.000+05:30

Muthoot Finance has come out with an issue of secured non-convertible debentures (NCDs) of Rs 3000 million size with a face value of Rs 1000. This is the second issue after Muthoot finance came out with successful issue few months back.

This issue is open on from December 22, 2011 and will close on January 7, 2012. The minimum investment required is Rs 5000.

The issue offers 4 options:
1. 24 months: 13% annual interest payment
2. 36 months: 13.25% annual interest payment
3. 60 months: 13.25% annual interest payment
4. 66 months: 13.43% effective interest rate with cumulative interest

Muthoot Finance NCD issue has got AA-/Stable rating by CRISIL and AA-/Stable rating by CARE. The issue will be listed in BSE with the depositories being CDSL and NSDL. DMAT account is a must to buy this issue and hold it.

The lead managers of this issue are ICICI Securities Limited, AK Capital Services Limited, HDFC Bank Limited, and Karvy Investor Services Limited.

Investors can actually double their investment in just 5 and 1/2 years with this NCD. Muthoot Finance has made consistent profits, and this is a secured NCD issue which means that certain assets of the company will be attached to the NCD in case of default. However, this doesn’t mean guarantee of any kind, and if it comes to a default then investors might get less than the face value of the bonds. We would advice investors to keep a balanced portfolio with assets in different instruments even in fixed income asset class.

Best Savings Bank Account in India

2011-12-25T01:25:00.000+05:30

Government of India deregulated savings deposit rate on 25th October, 2011. Due to this decision, some banks have started offering more than 4% interest rate on savings account.

Yes Bank, private sector lendor, was the first bank to raise the savings interest rate to 6%. On 22nd December, 2011, Yes Bank raised savings deposit rates to 7 per cent from 6 per cent for domestic customers with immediate effect.

Yes Bank also raised non-resident Indian savings account deposit rate by 200 basis points to 6 per cent for deposits up to Rs 100,000. For balances above Rs 100,000, the lender raised interest rate for deposits for NRIs by 300 basis points to 7 per cent.

Yes Bank is offering the highest savings deposit rate offered by any bank in India. So, even if investors are not putting their money in fixed deposits, they will continue to earn high interest rate along with flexibility of withdrawing money at any time.

NHAI Tax Free Bonds

2011-12-23T23:39:00.000+05:30

NHAI (National Highways Authority of India ) has come out with their tax free secured redeemable non convertible bonds public issue with a face value of Rs 1000 per bond. Investors will get tax benefits u/s 10 clause (15) of the Income Tax Act, 1961 – the interest received on such bonds are tax free in nature.

The issue opens on 28th December, 2011 and closes on 11th January, 2012.

Investors can earn 8.20% interest rate for 10 years which translates to 11.88% pre-tax yield. Investors willing to invest for 15 years can earn 8.30% interest rate which translates to 12.03% pre-tax yield.

The issue have been rated AAA (stable) from CRISIL and AAA (stable) from ICRA.

The minimum investment for this issue is 50 bonds or Rs 50,000 and in multiples of 1 bond or Rs 1000 thereafter. Bonds will be allotted on first-cum-first serve basis up to the issue size of relevant tranches. Bonds are likely to be issued either in Demat form or physical form at the option of bondholders.

NHAI Tax Free Bonds would get listed on the Bombay Stock Exchange and the National Stock Exchange.

Performance of Stock Market in 2011

2011-12-19T05:30:00.000+05:30

Stock Market took a beating in 2011 - the BSE Sensex down by almost 25%. This compared to NASDAQ which was down only 5% and FTSE which was down close to 9% since the beginning of 2011. Very few stocks managed to give a return in double digits, whereas there were quite a few stocks which yielded losses of over 50%. We did some comparison on various parameters which reflects the overall performance of the stock markets.

Comparison of indices across India, US and UK:
	3-Jan-11	18-Jan-11	% Profit/Loss
BSE (India)	20621	15491	-24.88
NASDAQ (US)	2691	2555	-5.05
FTSE (UK)	5900	5387	-8.69

Top 5 Stocks (comparison of stocks having market capitalization of more than Rs 5000 crores):
	3-Jan-11	18-Jan-11	% Profit/Loss
CRISIL	610	890	45.90
PetroNet LNG Ltd	125	160	28.00
Hindustan Unilever	313	392	25.24
Idea	69	84	21.74
Gujrat Mineral Development Corp	140	165	17.86

Bottom 5 Stocks (comparison of stocks having market capitalization of more than Rs 5000 crores):
	3-Jan-11	18-Jan-11	% Profit/Loss
Unitech	68	20	-70.59
Essar Oil	141	48	-65.96
Reliance Capital	687	247	-64.05
Crompton Greaves	312	119	-61.86
JSW Energy	100	39	-61.00

Top Dividend Yielding Stocks:
	Last Price	Latest Dividend %	Dividend Yield at these prices
			52 week high	52 week low	Current
Eon Electric	34	100	10	32	30
RSWM	65	150	8	23	23
HOV Services	36	80	6	23	23
Kanoria Chem	26	100	8	21	19
HCL Info	44	400	6	19	18

Also, look at some of the other investment options for 2012.

Performance of IPOs in 2011

2011-12-18T03:42:00.000+05:30

It was a terrible year for the IPOs in 2011. Out of 38 IPOs which listed in 2011, 27 yielded losses for investors and only 11 yielded profit for investors. Taksheel Solutions IPO yielded the highest loss at 91%. A share of Taksheel Solutions is currently trading at a price of Rs 13 against the issue price of Rs 150. Taksheel Solutions wasn't the only IPO which yielded such high loss for investors. A whopping 14 IPOs yielded more than 50% loss.

OneLife Capital IPO yielded the highest return at 113%. A share of OneLife Capital is currently trading at Rs 235 against the issue price of Rs 110. However, only 4 IPOs yielded a return of more than 50%.

There have been no IPO issues for the last 2 months because of poor market conditions and the trend for the next few months looks bleak as well. This reflected in the listing of last 4 IPOs as well which yielded significant losses for investors - the lowest being 59%. We have been giving out details of all IPOs here! Checkout our article for some of the best investment options for 2012 here!

Following are the list of IPOs that got listed in 2011 along with their issue price, current price and the %age of profit or loss:

IPO	Issue Price	Current Price	% Profit/Loss
Taksheel Solut	150	13.4	-91.07
Bharatiya Glob	82	9.79	-88.06
Acropetal Tech	90	12.51	-86.1
Brooks Labs	100	13.95	-86.05
Shilpi Cable	69	9.84	-85.74
Indo Thai Secu	74	10.73	-85.5
Paramount Print	35	5.19	-85.17
Servalakshmi	29	4.35	-85
Tijaria Polypip	60	9.84	-83.6
Vaswani Ind	49	8.89	-81.86
Sanghvi Forging	85	24.3	-71.41
PTC India Fin	28	10.8	-61.43
M and B Switch	186	75.9	-59.19
Timbor Home	63	25.9	-58.89
SRS	58	35.25	-39.22
Omkar Special	98	60.05	-38.72
Readymade Steel	108	66.4	-38.52
VMS Industries	40	25	-37.5
Birla Pacific	10	6.78	-32.2
Sudar Garments	77	52.65	-31.62
Innoventive Ind	117	81.45	-30.38
Shekhawati Poly	30	24.1	-19.67
L&T Finance	52	44.1	-15.19
Future Ventures	10	8.89	-11.1
Fineotex Chem	70	62.55	-10.64
Muthoot Finance	175	158	-9.71
TD Power System	256	235.25	-8.11
PG Electroplast	210	214.35	2.07
Tree House Edu	135	153.05	13.37
Midvalley Enter	70	80.45	14.93
C Mahendra Expo	110	131.9	19.91
Inventure Grow	117	150	28.21
Prakash Constro	138	204.55	48.22
Lovable Lingerie	205	305.6	49.07
Flexituff Inter	155	256.55	65.52
Rushil Decor	72	131	81.94
Aanjaneya Life	234	435.75	86.22
Onelife Capital	110	235.2	113.82

All the information about 80ccf Infrastructure Bonds

2011-12-17T02:27:00.000+05:30

The government had announced tax benefit on long term infrastructure bonds a couple of years back. Since there have been a number of infrastructure bond issues in the last month or so, we decided to write an article which gives all the details on infrastructure bonds.

Indian citizens can reduce taxable income by investing in certain instruments like life insurance, PPF, NSC, tax saving fixed deposits, or tax saving mutual funds, but the limit on the deduction from taxable income is Rs 100,000 under section 80c, 80ccc and 80ccd.

Section 80ccf allows Indian citizens to invest an additional Rs 20,000 in infrastructure bonds, and reduce the amount from taxable income in addition to the Rs 100,000 deduction mentioned above.

How much Tax an individual can save if coming under the highest tax bracket of 30%?
The Bonds provide an additional tax savings up to a maximum amount of Rs 6,180/- for investors coming under highest tax bracket.

What is the Tax Treatment of interest on these Bonds?
The interest received on these bonds shall be taxable on accrual basis. If one buys bonds worth Rs 20,000, then Rs1,800 will be added to taxable interest income every year till the time one hold these bonds.

What is the lock-in period of these bonds?
After 5 years investor may exit either through the secondary market or through a buyback facility specified by the issuer in the issue document at the time of issue. There will be no tax on the principal part after 5 years.

Will one get the tax benefit every year, or just one year?
Individuals will get the tax benefit only in the first year, which means that if one buys bonds worth Rs 20,000 in this year – Rs 20,000 will be deducted from your taxable income while calculating tax this year. There is no tax benefit from next year onwards.

Is there TDS on the interest?
No TDS shall be deducted on the interest received as these bonds.

Who are the eligible investors?
Only Resident Indian Individuals (Major) and HUF can invest in these bonds. NRIs cannot apply in these bonds.

Can a Minor apply for subscription to these bonds?
Minors are not allowed to invest in this Issue. So minor application even accompanied by Guardian is not acceptable.

Can one apply without an Demat account?
Yes, But it is dependent on issuer. Normally all issues have both options.

Can application have joint names?
Application can be made in joint names with a maximum of three applicants, however the demat account shall also be held in the joint names and order of applicant shall be the same as appearing in the demat account. In case of application made in joint names, the tax benefit shall only be availed by the first applicant. In case of joint application the interest shall be paid to the account of the first applicant only.

Who can offer these Long Term Infrastructure Bonds?
The entities like LlC, IDFC, IFCI, L&T and other NBFCs which are classified as Infrastructure Finance Companies by RBI shall be allowed to issue these long term infrastructure bonds.

Can one apply for subscription without PAN card?
PAN card is mandatory for subscribing to these bonds.

How will interest be paid on the due date?
The interest shall be credited to the respective Bank account registered with the Demat account through ECS on the due date for interest payment, and if the due date is a public holiday then the next working date.

Can one get loan on these bonds?
Individuals cannot avail of any loan pledging these bonds in the first 5 years. Thereafter, these bonds may be pledged to avail of loans.

Are Intercity clearing cheques acceptable?
No, cheques has to be payable at par or local clearing cheques are only allowed.

Which are the latest long term infrastructure bond issues?
IDFC, L&T and IFCI.

HDFC Fixed Maturity Plan - 370D - Dec 2011 Series 19

2011-12-13T04:07:00.001+05:30

The investment objective of the plans is to generate regular income through investments in debt /money market instruments and government securities maturing on or before the maturity date of the plans.

Issue Opens: 21 Dec 2011
Issue Closes: 28 Dec 2011
Mutual Fund Family: HDFC Asset Management Co. Ltd.
Fund Class: Fixed Maturity / Interval Plans
Fund Type: Close-Ended
Investment Plan: Growth
Fund Manager: Bharat Pareek
Entry Load: 0%
Exit Load: 0%
Minimum Investment: Rs 5000

Best Investment Options for 2012 - Quarter 1

2011-12-11T21:26:00.001+05:30

We have been writing a post on best investment options for each year. Since the investment scenario is changing so swiftly, we thought it is better to write 4 posts on best investment options - one for each quarter. If 2010 was the year for real estate, 2011 was definitely the year for Gold and Fixed Income instruments. It was raining instruments based on Gold and fixed deposits like NCDs etc. Investors got close to 14% return on instruments like NCDs, around 12% return on company fixed deposits and around 10% on bank fixed deposits. Gold had another good year though not as good as 2010 - this was surprising as most analysts were predicting a downfall, even George Soros claiming that Gold is the biggest asset bubble of all times. Gold gave a return of around 20% - much less than 30% in 2010 but still good enough as many asset classes were having a difficult time especially stock market. Stock Markets have given a negative return of 21% till date since the start of 2011 and real estate market turned sideways as well. This was understandable as last year both these asset classes gave substantial gains and it time to stabilize in case of real estate market and unfortunately, losses in case of stock markets.Only those who invested in the right stocks would have made some profit in stock markets in 2011.

It is important to note that inflation is still high so the effective return on investment is much lower. So, how does quarter 1 of 2012 look for investors and which asset classes are best to invest in 2012?

India's savings rate continues to be high and NRIs continue to send money back home - either to their parents and relatives or for further investment as the US Dollar and other major foreign currencies are at a high compared to Indian Rupee. This has been driving real estate prices till last year. However, government has firmed up interest rates significantly which has led to cooling off real estate prices. So, we do not expect real estate to give a high return in Quarter 1 of 2012 as government will be able to bring down interest rates only once the inflation is cooled down and that may take few months. Since the Indian Rupee is depreciating, it gives a good opportunity for NRIs to invest in India. US Dollar is currently at Rs 51 against Indian Rupee and is expected to touch Rs 55 in the coming few months. It will significantly boost the return if one invests for long term as these exchange rates are short term blip and Indian economy will not be able to sustain such high rates. RBI will have to intervene to appreciate rupee against other currencies.

Gold prices have been going up the roof for the last 5 years. That is understandable as the world economies were not in a good shape. There have been number of fair arguments whether there will be a double dip or not. US has been doing well in terms of jobs and other factors. However, few countries in Europe like Greece continue to be in dire need of funds. Any central agency like EU or IMF can only do up to a limit to help these countries with their debt. There have been talks of European Fiscal Union but even if it is formed, many expect that Euro will eventually collapse. If this happens in some orderly manner, it will be less disastrous and world economies may be able to cope with it and avoid double dip recession. Unless world economies are on a steady recovery path, Gold may still give decent returns as it is used as a safe haven by investors.

Interest rates have almost touched the ceiling. If RBI increases the interest rates further, it will be unsustainable for many industries. So, the interest rates offered by banks, companies and various other issues like NCDs are at a high. Investors, especially senior citizens can spread their investment in different types of fixed income instruments to hedge their risk and still make around 12% return.

Lastly, the most avidly watched asset class by investors - Stock Markets, which unfortunately was the most beaten sector in 2011. There have been no new issues of IPOs for the last 2 months and the quite a few of issues before that gave significant losses to investors. Most of the mutual funds have given a negative return - some in single digit and most in double digits. FIIs have been taking money out of Indian stock markets as they continue to hold cash in their native currencies. This is one of the main causes of Indian Rupee depreciating. India is still not in a position where it can rely on its inclusive growth and still needs foreign investment. Unfortunately, US and Europe are not doing great and if one or more countries break out of Euro, it will impact all economies and not just Europe. We do not think that FIIs will take risk of investing in emerging economies and significant investment is unlikely for quarter 1 of 2012. So, we recommend investors to be very cautious in stock market investments and do very thorough analysis before investing in this asset class.

Best of luck with your investment plans for 2012 and watch out for more posts for recommendations every quarter!

IFCI 80ccf Tax Saving Infrastructure Bonds 2011-2012: Review

2011-12-08T05:11:00.001+05:30

With the year coming to an end, lot of companies are coming out with tax saving infrastructure bonds. After IDFC and L&T, IFCI had come out with infrastructure bonds few months back which had much lower interest rate. Since the recent issues from different companies have offered much higher interest rate, IFCI has come out with long term infrastructure bonds issue again with the highest interest rate under this category this year so far. This can help save tax on Rs 20,000 under section 80ccf. This is an additional tax saving option that was introduced by government over and above Rs 1 lakh limit under section 80c.

The issue opens on 30 November, 2011 and shall close on 16 January, 2012. The face value of each bond is Rs 5,000.

IFCI offers the highest interest rate among all the companies who have come out with these infrastructure bonds. The company offers 9.09% interest rate for 10 years and 9.16% for 15 years bonds. There is a buyback option after 5 and 7 years. There are 2 options:

- Non-Cumulative: interest is paid annually

- Cumulative: interest is paid along with the principal at the time of maturity. Interest will be reinvested and will earn better return.

These bonds will be listed on BSE. L&T and IDFC offered 9% interest rate so interest offered by IFCI is definitely more and offers similar level of safety so we would recommend these bonds to investors for investing up to Rs 20,000 so that they can save tax as well as get a better return.

L&T 80ccf Tax Saving Infrastructure Bonds 2011-2012: Review

2011-12-08T04:29:00.001+05:30

After IDFC, L&T has come out with tax saving infrastructure bonds 2011B Series and plans to raise Rs 1100 crore with this issue. Investors can help save tax up to Rs 20,000 under section 80ccf. This is an additional tax saving option that was introduced by government over and above Rs 1 lakh limit under section 80c.

L&T Infrastructure tax saving bonds issue opens from 25 November, 2011 and shall close on 24 December, 2011.

The investors will get an interest rate of 9% per annum. There are 2 options avaialable:
- Non-Cumulative: The interest rate will be paid annually
- Cumulative: The interest will be reinvested and paid at the time of maturity giving better return

The minimum application is 5 bonds and each bond costs Rs 1000 each. The bonds mature in 10 years but can be sold after 5 years lock-in on BSE where they will be listed.

CARE and ICRA has assigned AA+ ratings to these bonds.

These Infrastructure Bonds 2011B Series (Tranche-1) is the first in the series for this financial year from L&T and there may be another one near march 2012. Investors might want to consider infrastructure bonds offered by IFCI as they are offering higher interest rate.

The NRIs cannot invest in this infra bond scheme.

NRI Deposits to earn higher interest rates

2011-11-26T10:00:00.000+05:30

RBI has allowed banks to offer higher return on dollar and rupee deposits made by NRIs. Depreciation in rupee against dollar and other major currencies has led to this decision. Increase in interest rates on NRI deposits will tempt NRIs to invest in India and thereby either bring dollars to India or buy Indian Rupees for investment. The rupee has been touching new lows for last few days and analysts expect it to depreciate even further - some saying that it may even go to Rs 55 against dollar in few months.

Banks can now give 125 basis points over London Inter-bank Offered Rate (LIBOR)- the benchmark rate in international money markets on foreign currency non-resident accounts. Prior to this, banks were allowed to offer only 100 basis points over LIBOR. On non-resident (external) or rupee deposits, the interest rate ceiling has been raised to 275 basis points over LIBOR. Prior to this, banks were allowed to offer only 175 basis points over LIBOR. The six-month Libor is at 0.71%.

In addition to this, RBI has also lifted the $100 million cap on banks for swap. In swap transactions, companies enter into deals with banks to swap rupee loans to dollar and banks sell dollar in spot market and buy in forward. But the market did not feel that this will help to increase dollar supply.

The global stock markets are in a turmoil because of US economic growth and Europe's debt worries. Indian stock markets are also falling down because of that as foreign investors are withdrawing funds.

PPF and Post Office interest rates to increase

2011-11-25T03:32:00.001+05:30

The government has announced higher interest rates for investments in PPF and schemes operated by post offices from 1 December, 2011.

Interest rates on public provident fund (PPF) will increase from 8% to 8.6% per annum. The government has also raised ceiling on annual contributions to the fund from Rs 70,000 to Rs one lakh.

Interest rates on savings account in post offices would also go up to 4 per cent from 3.5 per cent at present. Similarly, interest rates on deposits of other maturities too would be raised from December. In addition to this, the maturity period of monthly investment schemes (MIS) and national savings certificates (NSC) would be reduced from six to five years. MIS would earn an interest of 8.2 per cent, but accounts opened on or after 1 December, 2011 would not be entitled for bonus.

The government has announced discontinuation of the sale of Kisan Vikas Patras (KVP) from 30 November, 2011.

These decisions were long due as the bank fixed deposits are offering around 10% interest rate. Even the provident fund has been giving higher rates for the last few years. This is good news for investors as they can invest in PPF or NSC for getting tax benefit under Section 80c and also earn higher return.

IDFC 80ccf Tax Saving Infrastructure Bond - Review

2011-11-19T22:34:00.001+05:30

IDFC is the latest company to come out with tax saving long term infrastructure bonds after IFCI and PFC. Investors will get tax benefit on Rs 20,000 under Section 80ccf. This is additional tax benefit over Rs 1 Lac under Section 80c.

The issue shall open on 21 November and shall close on 16 December, 2011.

IDFC offers 9% interest rate with two options:

- Annual in which interest will be paid annually
- Cumulative in which interest will be paid along with principal at maturity

Maturity period is 10 years with buyback option after 5 years. Both ICRA and Fitch have rated these bonds as AAA.

We had already mentioned in the previous article that it is better to wait for investing in tax saving infrastructure bond as the interest rate is expected to rise. IDFC is a good company and is offering higher interest rate than IFCI and PFC so we would recommend investors to invest in these tax saving bonds if you have not already invested in PFC or IFCI.

Latest Resident/ NRO Bank Fixed Deposit Interest Rates - As of 13th November, 2011

2011-11-16T02:25:00.001+05:30

Not much changes happening with interest rates since the last month post. Interest rates inching towards 10% mark for normal citizens. For senior citizens, it is already 10%+ and have become attractive even for 4-5 years. For Senior Citizens, there is additional 0.25% to 1% more depending on the bank. Comparison of Latest Resident/NRO Bank Fixed Deposit Interest Rates - As of 13th November, 2011:

Bank	6 months	1 year	2 year	3 year	4 year	5 year
Bank	6 months	1 year	2 year	3 year	4 year	5 year
HSBC	8.00%	9.00%	8.00%	8.50%	8.50%	8.00%
ICICI	7.75%	9.25%	9.25%	9.25%	8.75%	8.75%
HDFC	7.75%	8.50%	9.25%	8.25%	8.25%	8.25%
Axis	7.75%	9.40%	9.30%	9.30%	8.50%	8.50%
IDBI	9.00%	9.50%	9.50%	9.50%	9.50%	9.50%
Barclays	8.00%	8.25%	9.00%	9.25%	9.25%	9.25%
PNB	8.00%	9.25%	9.35%	9.50%	9.25%	9.25%
BOI	8.00%	9.00%	9.25%	9.00%	8.50%	8.75%
Oriental	9.00%	9.75%	9.75%	9.25%	9.25%	9.25%
Canara	8.10%	9.25%	9.25%	9.25%	9.00%	9.00%
SBI	7.00%	9.25%	9.25%	9.25%	9.25%	9.25%
Dena	8.00%	9.60%	9.25%	9.25%	9.25%	9.25%
Citibank	8.50%	9.00%	8.75%	8.75%	8.75%	8.75%
IndusInd	8.50%	9.50%	9.00%	9.50%	8.75%	8.75%
Yes	8.50%	9.25%	9.60%	9.30%	8.75%	8.75%

Best Senior Citizen FD (Fixed Deposit)

2011-10-31T15:13:00.000+05:30

Interest rates have shot up this year. So, fixed deposits have become an attractive investment option for investors, especially senior citizens who are risk averse. Lot of banks are offering more than 10% interest rate on fixed deposits for senior citizens. In this post, we try to find out the best fixed deposit option for senior citizens. We would try to consider the popular banks who have decent retail network and would not consider banks offering below 10% interest rate for senior citizens. When there are so many banks offering above 10% interest rate, lets concentrate on these banks only.

ICICI Bank is offering 10% on 990 days fixed deposit, Kotak Bank on 770 days fixed deposit, Indian Overseas Bank and Federal Bank on 1 year fixed deposit.

IDBI Bank is offering 10.25% on 500 days fixed deposit, Indian Bank on 9 months to less than 1 year fixed deposit, Corporation Bank on 12 months fixed deposit, Karnataka Bank on 1 year to less than 2 year fixed deposit, Punjab and Sind bank on 500 days fixed deposit, State Bank of Patiala on 999 days fixed deposit.

Axis Bank is offering 10.40% on 1 year to less than 14 months fixed deposit.

State Bank of Travancore is offering 10.50% on 500 days fixed deposit, City Union Bank on 1 year to 2 year fixed deposit, South Indian Bank and Dhanalaxmi Bank on 300 days fixed deposit.

Yes Bank is offering 10.60% on 500 days fixed deposit.

Lakshmi Vilas Bank is offering 10.75% on 1 year to 2 year fixed deposit.

Since the interest rates have almost reached their peak and are expected to go down next year, we would recommend investing in a fixed deposit which offers high interest rate and also offers high tenure on the fixed deposit. Among the options mentioned above, Yes Bank is offering 10.60% on 500 days fixed deposit which is very good. Lakshmi Vilas Bank is offering marginally higher interest rate and higher tenure but does not have very good network in all cities. If you don't have Yes Bank in your city, you could also consider State Bank of Travancore or Axis Bank.

To know interest rates for regular fixed deposits, refer the post here!

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