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Rate cut? Here is an opportunity to earn 9.1 per cent return per annum!

Amitava Chakrabarty
GDP growth, inflation, fixed deposit, FD, FD interest rates, Shriram Transport Finance Co. Ltd., Non-Convertible Debentures, NCD, NCD rates

Among the stories of lower GDP growth, high inflation and cut in fixed deposit (FD) interest rates, Shriram Transport Finance Co. Ltd. has come up with its public issue of Secured Redeemable Non-Convertible Debentures (NCDs) having eight investment options with returns up to 9.10 per cent per annum.

The aggregate issue size is up to Rs 1,000 crore (Tranche II issue limit) and the allotment will be on first-come-first-serve basis.

As per the issue structure, investors would get 9.10 per cent per annum coupon payable annually for 84 months tenure in Series VI.

Incorporated in the year 1979, Shriram Transport Finance has significant presence in financial services. Along with commercial vehicle financing business, consumer finance, life and general insurance, stock broking, chit funds, the company is also present in the business of distribution of financial products such as life and general insurance products and units of mutual funds.

Opened for issue on January 6, 2020, the secured NCDs has got AA+ / Stable credit ratings by renowned credit rating agencies, viz. CRISIL, CARE and Indian Ratings.

The minimum application limit for the issue is Rs 10,000 (10 NCDs) and in multiple of Rs 1,000 (1 NCD) thereafter.

In order to provide liquidity, Shriram Transport Finance has proposed to list the NCDs on both Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Though the NCDs would be listed on stock exchanges, but the price per NCD may fluctuate in the secondary market depending on the demand.

However, if you hold these NCDs till maturity, the redemption value would be Rs 1000 per NCD for Series I to VI and Rs 1289.99, Rs 1539.35, for Series VII, VIII respectively irrespective of the price fluctuation in the secondary market.

Following table shows the tenure-wise rate of interest on the NCDs:

Apart from the rates mentioned in the above table, senior citizen applicants will get additional interest of 0.25 per cent.

To know the suitability of the NCDs as per your financial needs, consult your financial advisor before investing.