Looking for better than a Fixed Deposit interest rate? Shriram
Transport Finance Co Ltd NCD gives up to 9.10% return
For those who are looking to deposit
money at a higher interest rate, Shriram Transport Finance Company NCD offer
maybe considered.
NCDs are relatively riskier
investment products compared to bank FDs and post office schemes. If you are
looking for a better investment than bank fixed deposits (FD), there may not be
many fixed income options available in the market. In the present scenario, the
interest rates on bank fixed deposits may not appear attractive. In most
leading banks, the FD interest rate is around 6.5 percent per annum across
different tenures. Even the interest rate of most post office schemes is around
7.5 percent over the 1 to 5-year tenure.
For those looking to deposit
money at a higher interest rate, the Shriram Transport Finance Company NCD
offer may be considered. The company is coming out with its Tranche II Issue of
NCDs issuing Secured Redeemable Non-Convertible Debentures (NCDs) of the face
value of Rs. 1,000 each. The Tranche 2 Issue will open for subscription on
Monday, January 06, 2020, and is scheduled to close on Wednesday, January 22,
2020, with an option of early closure or extension. Remember, the higher return
comes with higher risk as well and one should, therefore, invest based on one’s
risk profile.
Investment options: One may choose to invest for 3 years,
5 years or 7 years with monthly, annual and cumulative interest payment option.
However, the cumulative interest payment option is only available in the 3
years and 5 years tenure.
Also Read: What are Non Convertible Debentures (NCDs)?
Rate of interest: These NCDs, bearing a fixed rate of
interest, are being offered under 8 (eight) different series:
Series I, II and III are
monthly interest payment options, having a tenor of 3, 5 and 7 years
respectively and the monthly Coupon shall be 8.52 percent per annum, 8.66 per
cent per annum and 8.75 percent per annum respectively.
For Series IV, V and VI
interest is payable annually, having a tenor of 3, 5, 7 years respectively, and
the coupon shall be 8.85 percent per annum, 9.00 percent per annum, 9.10 percent
per annum respectively.
Series VII and VIII are
cumulative options, having a tenor of 3 and 5 years respectively, where face
value and interest accrued are paid at the end of the tenor and will be
redeemed at Rs. 1289.99, and Rs. 1539.35 per NCD respectively.
Effective yield for Series VII
and VIII shall be 8.85 percent per
annum and 9.00 percent per annum respectively.
Additionally, Senior Citizens
who are initial allottees under Category III and Category IV are entitled to an
additional incentive of 0.25 percent per annum across all series. Accordingly,
the amount payable on redemption to such Senior Citizens for NCDs under Series
VII and Series VIII are Rs. 1298.91 and
Rs. 1557.11 per NCD respectively.
Safety: The NCDs are rated ‘CARE AA+; Stable’ by CARE
Ratings Limited, ‘CRISIL AA+/Stable’ by CRISIL Limited and ‘IND AA+: Outlook
Stable’ by India Ratings and Research Private Limited. The ratings indicate the high degree of safety regarding timely servicing of financial obligations and
carry very low credit risk, however, the rating may change over time.
Liquidity: For liquidity needs, one can sell the NCDs on
stock exchanges. The NCDs are proposed to be listed on the National Stock
Exchange of India Limited (NSE) and the BSE Limited (BSE) and NSE shall be
Designated Stock Exchange.
NCDs are relatively riskier
investment products compared to bank FDs and post office schemes. Based on
one’s risk appetite, financial goals investing a portion of the money may be
considered in NCDs.
