Investment Strategy With higher uncertainty in debt and equity markets, this would be the time to review asset allocation and manage risk. There is now an opportunity to construct a layered debt portfolio. A phased transition out of ultrashort-term funds into high-quality accrual funds may be warranted. Policy Highlights…
An Introduction As banking systems in multiple countries evolved,the need to have an international agreement that bound them arose. The idea was to addresses regulation, supervision, and risk management for banks across the globe. The Basel Committee on Bank Supervision was set up in 1974 to create a…
What are non-convertible debentures and why are they issued? A company can raise capital either by offering an ownership stake (equity) or by borrowing money (debt). Debt is primarily issued in the form of loans, bonds, or debentures. Debentures are corporate debt instruments. Some may be converted into equity shares.…
The Premise The RBI first issued 8% bonds in 2003. As the name suggests, they pay 8% interest per annum and the interest income is taxable. Investors need to invest a minimum of Rs. 1,000 there is no ceiling or limit on the investment amount. Normally, the bonds have a maturity of…
54 EC Bonds are popularly known for the tax benefits they provide under Section 54 EC of the Income Tax Act. These bonds are typically issued by the Power Finance Corp (PFC), Rural Electrification Company (REC), and the National Highways Authority of India (NHAI).
Government-backed entities such as, NHAI, REC, PFC, etc. issue tax-free bonds to raise capital. The capital is meant for long-term projects and these bonds have tenors of 10, 15 or 20 years. The interest earned from these bonds is exempt from taxation. Capital gains from the sale of bonds are taxable.