FIXED RETURNS: WHAT’S ON OFFER Shriram Transport Finance NCD (secured)
Interest rate/ returns
9.75% (annual interest)*#, 10.25% (semi-annual interest)*#, 10.50% annual (phased payout)*#
Shriram Transport Finance NCD (unsecured) Money gets doubled*, 11% (annual)*
Bank fixed deposit
Company fixed deposit
Mutual Post Office Monthly fund (long-term bond Income Scheme fund)
Government of India bond
5.75-7.75%
7.5-12.5%
Market-linked1
8% per annum
8% per annum
Liquidity
Listed on NSE
Listed on NSE
Yes
Depends on the company
1-2 days after applying for withdrawal
After 1 year
No
Exit load/ premature penalty
Put/call option available 2
Put/call option available 2
Interest loss penalty + 1% penalty2
Around 1%
Up to 0.5%, if withdrawn before 6 months
2% if withdrawn between 1 year and 3 years; 1% before 6 years
NA
10,000
10,000
500-10,000
10,000
5,000
1,500
NA
5 (annual and phased redemption options), 7 (semi-annual option)
6.5 (double option), 7 (annual)
3-5
3-5
Open-ended
6
6
Yes4
Yes4
Yes
Yes4
No
Yes
Yes
Company financial stability
Company financial stability
Deposits up to a maximum of Rs1 lakh insured
Company financial stability
Market risks; net asset value of debt funds move up and down
Safest regular income option; monthly payments guaranteed by GoI
Safest regular income option; monthly payments guaranteed by GoI
Tax on interest/ dividend income
Income-tax rates
Income-tax rates
Income-tax rates
Income-tax rates
13.840% dividend distribution tax
Income-tax rates
Income-tax rates
Tax on principal
Nil
Nil
Nil
Nil
11.22% long-term capital gains tax if withdrawn after a year
Nil
Nil
AA+**
AA**
Nil but up to Rs1 lakh deposit insured5
Not rated to AAA
NR
Backed by GoI
Backed by GoI
Minimum investment (Rs) Term (years) Assured returns
Type of risk
Credit rating
1 Debt funds invest their corpuses in debt markets and thus get affected by market volatility; 2 selling of NCDs on stock exchanges will happen at market price. Therefore, yields may get affected; 3 interest loss penalty means you get interest applicable only for the number of days you stay invested. Some banks don't levy penalty and some even waive penalty at their discretion; 4 assurance of returns depends upon the company's balance sheet and its solvency; 5 on account of stringent guidelines by the Reserve Bank of India, investments beyond Rs1 lakh are also perceived to be safe. Banks are perceived to be safer; NR: not required; NA: not applicable; NCD: non-convertible debenture; GoI: government of India; *different interest rates for different options; you need a demat account to invest in both secured and unsecured NCDs; **rating by CARE; #reserved individual interest rates and senior citizens will get additional 0.25%
Source: Mint research