NABARD’s upcoming issue of tax free Bonds
NABARD Mar 2016 Draft Product Note Download Product Note Here
Issue Structure:
| Issuer | National Bank for Agriculture and Rural Development (NABARD). |
| Type of Instrument | Public Issue of tax-free, secured, redeemable, non-convertible Bonds of face value of Rs. 1,000.00 each in the nature of Debentures having tax benefits under section 10(15)(iv)(h) of the Income Tax Act. |
| Nature of Instrument | Tax-free, secured, redeemable, non-convertible bonds in the nature of debentures. |
| Mode of Issue | Public Issue. |
| Nature of Indebtedness | The claims of the Bondholders shall be superior to the claims of any unsecured creditors of NABARD, existing or in the future, and subject to applicable statutory and/or regulatory requirements. Further, the claims of the Bondholders shall rank pari passu inter se to the claims of other secured creditors of NABARD having the same security. |
| Listing | The Bonds are proposed to be listed on BSE within 12 Working Days from the Issue Closing Date. |
| Put/Call | Not Applicable |
| Rating of the Instrument | “CRISIL AAA / Stable” by CRISIL and “Ind AAA” / Stable by India Ratings. |
| Issue Size | Rs.3,500 crore. |
| Default Interest Rate | As specified in the Bond Trust Deed to be executed between NABARD and the Trustee for the Bondholders. |
| Issue Price/Face Value | Rs.1,000 for each bond. |
| Issue Opening Date | As mentioned in the Prospectus. |
| Issue Closing Date | As mentioned in the Prospectus.
The Issue shall remain open for subscription from 10:00 a.m. to 5:00 p.m. (Indian Standard Time) during the period indicated above, with an option for early closure or extension as may be decided by the Board or a duly constituted committee or authorized person thereof. In the event of such early closure or extension of the subscription period of the Issue, the Issuer shall ensure that public notice of such early closure or extension is published on or before the date of such early date of closure or the Issue Closing Date, as the case may be, through advertisement(s) in at least one leading national daily newspaper with wide circulation. |
| Deemed Date of Allotment | Deemed Date of Allotment shall be the date on which the Board or a duly constituted committee or authorized person thereof approves the Allotment of the Bonds for the Issue or such date as may be determined by the Board or a duly constituted committee or authorized person thereof and notified to the Stock Exchange. All benefits relating to the Bonds including interest on Bonds shall be available to the Bondholders from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. |
| Trading mode | Compulsorily in dematerialized form** |
| Issuance mode | Dematerialised form or physical form as specified by an Applicant in the Application Form. |
| Depositories | NSDL and CDSL. |
| Lead Managers to the Issue | A. K. CAPITAL SERVICES LIMITED, EDELWEISS FINANCIAL SERVICES LIMITED, ICICI SECURITIES LIMITED, RR INVESTORS CAPITAL SERVICES PVT. LTD., SBI CAPITAL MARKETS LIMITED. |
| Bond Trustee | Axis Trustee Services Limited. |
HIGHLIGHTS OF TAX BENEFITS
• Interest from these Bonds do not form part of total income as per provisions of Section 10 (15) (iv) (h) of Income Tax Act, 1961 read
along with Section 14A (1) of the Income Tax Act, 1961.
• Interest Income on these bonds is exempt, however interest on application money would be liable for TDS as well as tax as per present
tax laws.
COMPANY PROFILE
• National Bank for Agriculture and Rural Development (NABARD) is an apex development institution in India, having its headquarters in
Mumbai (Maharashtra). It was established on July 12, 1982 by a special Act of Parliament and its main focus has since been the
upliftment and development of rural India by increasing the credit flow for elevation of agriculture and rural non-farm sector.
• NABARD was set up with an initial capital of Rs.100 crores. Consequent to the revision in the composition of share capital between GoI
and RBI, the share capital as on March 31, 2015, stood at Rs.5,000 crores with GoI holding Rs.4,980 crores (99.60%) and RBI Rs.20.00
crores (0.40%).
• NABARD has a mandate under the NABARD Act 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 areas in
India with a view to promoting integrated rural development.
• NABARD also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural
development and secure prosperity of rural areas.
• NABARD operates throughout the country through its 31 Regional Offices, a cell at Srinagar and Training establishments at Lucknow,
Bolpur and Mangalore. It also has 400 District Development Offices across the country as of March 31, 2015.
• NABARD’s resource profile is marked by regular government support for raising borrowings. Furthermore, in the domestic debt market,
NABARD’s paper is accepted as a benchmark in its category and has wide acceptability among the investors comprising mutual funds,
pension funds, and insurance companies.
CA Shafaly Girdharwal
CA
New Delhi, India
CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.
