REC Tax Free Bond

REC (Rural Electrification Corporation Ltd) a Government of India run PSU,  is shortly coming out with issue of REC Tax Free Bonds, tentatively from March 06, 2012 for collecting 3000 Crore under section 10(15)(iv)(h) of Income Tax Act,1961 with a estimated coupon rate of 7.93%* – 8.32%  under 10/15 year tenure . The issue is on ‘First-come-first-serve’ basis.

For any query mail at : aarkay@moneyvriksh.com

Visit REC Tax Free Bond FY2012-13 Page

Download Application Forms

Terms of the Issue:

Issuer	Rural Electrification Corporation Limited
Issue Opening Date	06/03/2012
Issue Closing Date	12/03/2012
Instrument	Tax-Free Secured Redeemable Non-Convertible Bonds in the nature of Debentures
Min Application Size	Rs 5,000/-
Thereafter in multiples of	Rs 1,000/-
Interest on Refund	5% p.a
Interest on application money	Interest on coupon
Credit Rating	CRISIL AAA/Stable”by CRISIL,“CARE AAA”by CARE,                                 “Fitch AAA(ind)”by FITCH and “[ICRA]AAA”by ICRA
Issue Size	Rs. 1,500 Crore with an Green Shoe option (option to retain oversubscription) of up to Rs. 3,000 Crore
Security	The Bonds shall be secured by way of first pari passu charge on the identified immovable property(ies) of the Company and first pari passu charge on the book debts of the Company, other than those that are exclusively charged/earmarked to ITSL and/or any other lender(s) of the Company, as may be agreed between the Company and the Debenture Trustee, pursuant to the terms of the Debenture Trust Deed with a minimum security cover of one time of the face value of Bonds outstanding at all times.
Tranche	Series-I	Series-II
Tenor	10 Years	15 Years
Put Call Option	None	None
Maturity/ Redemption	At par on the expiry of 10th Year from the Deemed Date of Allotment	At par on the expiry of 15th Year from the Deemed Date of Allotment
Annual Coupon	7.93%	8.12%
Additional Coupon	An additional interest at the rate of 0.20% pa and 0.20% pa shall be payable to the allottees under category III for Tranche I: Series I and Tranche I: Series II respectively. However this additional rate is not applicable in the following cases: · In case the Bonds are sold and/or transferred by the original allottee
Interest Payment	Annual	Annual
Interest Payment Date	July 1st of every year and on redemption date of the respective bond series
Mode of Allotment	Compulsary in Demat (NSDL & CDSL)
Listing	Proposed on BSE Ltd. (“BSE”).The designated stock exchange for the issue.
Trustee	IL&FS Trust Company Limited

• Issue shall remain open for subscription for a minimum of 3 days or such extended period upto a maximum period of 15 days from the date of opening of the Issue. In case of early closure, REC shall ensure that public notice of such early closure is published on or before the day of such early date of closure through advertisement/s in a leading national daily newspaper.
  
• Documents Required (For Individuals and corporate) : details of Depositary and beneficiary account of applicant. MOA, AOA and Power of Attorney or relevant resolution or authority in case of companies, corporate bodies, registered societies, MFs, Insurance Companies  etc.

REC Tax Free bond: Taxman’s Rs 1-lakh new cap less than Sebi norm

• The Government of India has reduced the cap on subscription by retail investors in the Rs 3,000-crore tax-free bond issue of Rural Electrification Corp (REC)  from Rs 5 lakh to Rs 1 lakh that was allowed for previous such issues.
• A notification dated February 14 issued by Central Board of Direct Taxes (CBDT) clearing the issue has said that “any individual investing over Rs 1 lakh will be classified as high net worth individual (HNIs)”.
• All previous tax-free bond issues from National Highways Authority of India (NHAI), Power Finance Corp, Housing and Urban Development Corp, and Indian Railway Finance Corp allowed retail investors to invest up to Rs 5 lakh.

Subscription Details on 12/03/2012 (Final Day)

REC Tax Free Bonds	Amt. Collected	Allocation	% Subscribed
CAT – I	2429 Cr	1500 Cr	162%
CAT – II	1739 Cr	750 Cr	232%
CAT – III	581 Cr	750 Cr	77%

Check category investors below :

Category I	Category II	Category III
Mutual Fund,	The following investors applying for an amount aggregating to above Rs. 1 lakhs across all series in each tranche	The following investors applying for an amount aggregating to up to and including Rs. 1 lakhs across all series in each tranche
Public Financial Institution as defined in section 4A of the Companies Act, 1956;	Resident Indian individuals;	Resident Indian individuals;
Scheduled Commercial Bank;	Hindu Undivided Families through the Karta	Hindu Undivided Families through the Karta
Multilateral and Bilateral Development Financial Institution;
State Industrial Development Corporation;
Insurance Company registered with the Insurance Regulatory and Development Authority;
Provident Fund with minimum corpus of twenty five crore rupees;
Pension Fund with minimum corpus of twenty five crore rupees;
National Investment Fund set up by resolution no. F. No. 2/3/2005- DDII dated November 23, 2005 of the Government of India published in the Gazette of India;
Insurance Funds set up and managed by army, navy or air force of the Union of India
Insurance Funds set up and managed by the Department of Posts, India
Regional Rural Banks and Co-operative Banks, eligible to invest in the Issue;
Companies; bodies corporate and societies registered under the applicable laws in India and authorised to invest in the Bonds;
Public/private charitable /religious trusts which are authorised to invest in the Bonds;
Scientific and/or industrial research organisations, which are authorised to invest in the Bonds;
Partnership firms in the name of the partners; Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009

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Tags: March 2012, REC, Tax Free Bonds

Category: Blog, IPO, Tax Free Bonds