To read the article in Tamil as published by Nanayam vikatan - Click here
To read the same article in Tamil as published in blog - Click here
Data updated on 21/01/2019
To read the same article in Tamil as published in blog - Click here
Data updated on 21/01/2019
Fixed Deposit is nothing new to us,
literally everyone has invested some of their savings in Bank Fixed Deposit
during some point of time. But at the same time, we love those investments that
give us more returns than Fixed Deposits. It has already been talked about
that, Debt based Mutual Funds are a better investment than Fixed Deposits. A
lot of people are aware about it, but not many have actually made an investment
in it. One of the reason could be, the returns from Mutual Funds is not fixed.
There have been cases where the returns from mutual funds have been lesser than
Fixed Deposits. To keep receiving stable higher returns than Fixed Deposits, we
can invest in Non-Convertible
Debentures.
So, what is Non-Convertible Debentures
(NCD)? Let us take a look at 10 things about Non-Convertible Debentures:
1. Fixed interest rate for a specific
time period
Investors get a specified return interest
for a fixed time. The interest is not going to fluctuate like it does in some
Mutual Funds. Hence, investing in Non-Convertible Debentures means, you will
get your specified interest at the opted intervals.
2. The way you receive interest
There are different options for investors
to get their returns. It could be once a month, or once a year, or during the
end of its term.
3. Investment Time period
There are different options for Investment
Time Period too, like 3 years, 5 years or 10 years. The investor can choose their
preferred time periods.
4. Transferable Instruments
Fixed Deposits cannot be transferred from
one person to another. However, Non-Convertible Debentures can be transferred
from one person to another and hence can be sold and bought in the market.
5. Getting money before Maturity
You can break a Fixed Deposit and take your
money back with a reduced interest rate. However, in terms of Non-Convertible
Debentures, the institution will not allow you to break before its maturity. As
indicated in point 4, you can sell it in the market and receive the proceedings.
6. Secured Non-Convertible Debentures
Most of the NCD’s are Secured NCD’s. In a
situation where the institution is not able to return the investors’ money, there
is a provision where trustees must sell underlying assets secured for the NCD
and distribute the proceedings to the investors. This provision is not
available in Fixed Deposits. Its one of the highlights of Non-Convertible
Debentures.
7. Interest Rate and Credit Rating
An important feature to keep a close eye
out for is the Credit Ratings. If an NCD has a high rating (AAA), then its
return percentage would be less. If an NCD has a low rating (A), then its
interest rate is high.
8. DMAT & Non-Convertible Debenture
NCD’s are obtained in the form of DMAT.
9. Interest rate scenario
The interest rate outlook has changed from a
rising trend to a stable or otherwise. The crude oil prices have gone down and the
inflationary pressures are less, and in this scenario, the interest rates will
not increase again. Because of this, the opportunity to invest in high interest
rate instruments are less. Hence, we should use this opportunity to get 9+ %
interest rate by investing in NCDs and it may turn out to be a good option.
10. Opportune time
After ILFS episode, Non-banking finance
companies are finding it difficult to meet their cash requirements to grow
their business. In this backdrop, they are trying to woo the investor with
higher interest NCD options. Investor can use this opportune time and invest in
good company NCD with attractive interest rates.
NCD's currently open for subscription:
NCD's currently open for subscription:
Institutions Name
|
Mahindra
|
Sriram Transport
|
India infoline
|
Credit Rating
|
AAA
|
AA+
|
AA
|
Minimum Monthly Time Period
|
39 Months
|
36 Months
|
39 Months
|
Interest Type
|
Once a Year
|
Once a Year
|
Once a Year
|
Interest Rate
|
9.05%
|
9.40%
|
9.60%
|
Buying NCD Deadline Day #
|
25-01-2019
|
31-01-2019
|
20-02-2019
|
Current status
|
Closed
|
Will open on 22- Jan 2019
|
# The buying
deadline day can be earlier than the date mentioned above. This is decided by
the institution and once they receive the funds they estimated, they will decide.
Hence, if you have decided to invest in NCD’s, then without any delay, invest
quickly on them.
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