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WHAT IS CALL OPTION & PUT OPTION IN BONDS?

Bond Option is a contract between seller and buyer to be executed in the future at a predefined time and price (irrespective of current market price). A call option gives the buyer the right to buy the bonds but does not create an obligation on either party to execute the option. A put option provides the seller with the right to sell the bonds but does not create an obligation on either party to complete the option. Bonds with embedded call options are called callable bonds, and Bonds with embedded puttable options are called puttable options.

What is Call / Put option date?

Call / Put option date is the date on which issuer or investor can exercise their rights to redeem the security.

-2023 Change / Correction in Name / Address correction.

Please note, SEBI vide their Circulars have mandated:Furnishing of PAN, Address with PIN code, Email address(optional), Mobile No., Bank Account details, Specimen Signature & Nomination by holders of physical securities (collectively, called KYC requirement), and that “From January 1, 2022, RTAs shall not process any service requests or complaints received from the holder(s)/claimant(s), till PAN, KYC, and Nomination documents/details are received. Click on the link to download a copy of the SEBI Circular dated 16th March 2023. For Physical Folios who are Not KYC compliant, please comply with:The relevant Forms for registering /changing KYC details and Nomination, viz. Forms ISR-1, ISR-2, ISR-3, SH-13, and SH-14 as well as the SEBI circulars are available on our website -> KYC-Formats In order to make the folio KYC compliant, the holder is required to submit the duly completed KYC Forms along with supporting documents as indicated therein. Kindly also ensure that your Aadhaar is seeded with PAN, for the folio to be KYC Compliant. Completing to a full KYC is easy. Simply drop into our office location on any Business Day for (IPV):In-Person Verification with our officer as per your convenience, with the set of original documents and self-attested copies of documents to be submitted.Alternatively, you may also courier the self-attested copies with the date, and the courier the complete set of KYC documents to our office address.Focus AddressIn case you wish to comply with the KYC, using E-sign, do mail us from your registered e-mail id only. Alternatively, the e-signed documents are also accepted at our web portal. Please click the link -> KYC ComplianceFor KYC-compliant folio and if there is a change of name :Kindly fill and submit Form ISR-1, and Form ISR-2 duly filled and attested by the Bank manager along with the original canceled cheque leaf bearing the name of the first holder is mandatory, failing which the security holder shall submit a copy of the bank passbook/statement attested by the Bank. The attestation shall contain the employee code and Bank seal. Self-attested copy of the PAN card with the new name and supporting documents with the original securities certificate(s) is required;i. For Individuals, consequent to marriage / divorce / attaining majority:1. Legible copy of the documents mentioned below, in respect of each name change, duly attested by Notary Public / Bank Manager / First Class Magistrate. Attestation by Notary Public / First Class Magistrate should mention their name, full address, and registration number and affix their seal, and Notarial / Court Fee stamps, as applicable. Attestation by Bank Manager should bear the name, full address, and official stamp of the bank.The name on the documents submitted should be the same as that on the securities.Marriage- Legally recognized Marriage Certificate / Government Gazette or copy of valid Passport showing the husband's nameDivorce- Divorce DecreeAttaining Majority-Birth Certificate / School Leaving Certificate2. Original certificates for the securities.3. Application Form for Transmission duly completed and signed by the holder(s) whose signature(s) should be attested by his/their Bank Manager under his name, full address, and official stamp of the bank.4. Self-attested copy of PAN Card of the holder(s).5.. Any other document evidencing the old name as per the document list.ii. For Individuals other than marriage: Publication of name change in the official gazette, and any document evidencing the old name as per Annexure-E__Read__more__iii. For Corporates consequent to change in name of the Company:For securities held in physical form, please submit the following:-1. Letter duly signed by the authorized signatory/trustee supported by the certified true copy of the documents mentioned below in respect of:-For Corporate Body:Certificate of Incorporation along with Memorandum and Articles of Association.The Board Resolution signed by the Company Secretary/Directors on the letterhead of the Company empowering the signatories to sign on behalf of the Company along with the specimen signatures of the Authorized Signatories is also to be submitted.-For Trust:Certificate of Registration along with the Trust Deed.The Resolution signed by the Secretary/Trustee on the letterhead of the Trust empowering the signatories to sign on behalf of the Trust along with the specimen signatures of the Authorized Signatories is also to be submitted.-For Society:Certificate of Registration along with their Bye Laws/ Rules & Regulations. The Resolution signed by the Secretary/Trustee on the letterhead of the Society empowering the signatories to sign on behalf of the Society along with the specimen signatures of the Authorized Signatories is also to be submitted.2. Original certificates for the securities.3. Application Form for Transmission duly completed and signed by the Authorized Signatories.4. Certified true copy of PAN Card of the first-named holder, Individual/ Corporate Body/ Trust/ Trustees/Society as the case may be.In case a change in address for corporates is to be noted, the request to this effect should be supported by the certified true copy of Form No.18 / INC 22 filed with the Registrar of Companies for change in the registered office address.(needed only if the address of the Company has changed)__Read__more__ Documents required :Any Onea.Self-attested copy of any 1 of the following documents issued by a Government authority:  b. Client Master List (CML) of your demat account, provided by the Depository Participant, which has to be attested by your DP.c. Valid Passport / Registered Lease (notarised) or Sale Agreement of Residence/Driving License/Flat Maintenance Bill*d. Utility bills like telephone bills (only landline), electricity bills or gas bills (not more than 3 months old)e. Identity Card with photo/document with address, issued by Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutionsf. For FII/subaccount, Power of Attorney given by FII/subaccount to the Custodians (which are duly notarized and/or apostilled or consularised) that gives the registered address.g. Proof of address in the name of the spouse self-attested with the date and identity proof of the holder/claimanth. Unique Identification Number (UID) (Aadhaar) i. any other document as required __Read__more__Apart from what is stated above, if you have not updated your KYC in the physical folio, held by you in the company, then1)   A request letter explaining the reason for the mismatch in the name. (All KYC documents as mentioned below should be in the NEW name along with proof of anyone ID in the old name).Pl check “Annexure E” for acceptable documents in the old name. 2) Form ISR-1 is dully filled in all respects.3) Self-attested copy of Pan card with the correct name.4) Self-attested copy of any one of the documents mentioned below as proof of address:Aadhaar Card, Valid Passport, Utility bills like Telephone Bills, Electricity bills & Gas Bills not more than 3 months old.   5) Form ISR-2 duly filled and attested by the bank manager along with the original canceled cheque leaf for all the registered security holders. Also note the original canceled cheque leaf bearing the name of the first holder is mandatory, failing which the first security holder shall submit a copy of the bank passbook/statement attested by the Bank for registering the Bank Account details. Note: All the details on the banker verification form need to be completely filled in (i.e., the date of opening the account, details of the person attesting the signature, etc.)6) Original certificate/s for the entire holding.__Read__more__For Change or Correction in Address:For KYC compliant folio, please submit the following:A written request for change in address in Form ISR-1, duly signed by the first holder as per the specimen signature recorded with the Company /RTA and supporting documents as indicated herein:Self-attested copy of any 1 of the following documents issued by a Government authority:a. Valid Passport / Registered Lease or Sale Agreement of Residence / Driving License / Flat Maintenance bill.b. Utility bills like Telephone Bill (only landline), Electricity bill or Gas bill - Not more than 3 months old.c. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory / Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, Public Financial Institutionsd. For FII / sub-account, Power of Attorney given by FII / sub-account to the Custodians (which are duly notarized and/or apostilled or consularised) that gives the registered address should be taken.e. Client Master List (CML) of the Demat Account of the holder/claimant, provided by the Depository Participant.f. If proof of address is in the name of the spouse, please provide a self-attested copy of the Identity Proof of the holder/claimant.g. Unique Identification Number (UID) (Aadhaar) If you are claiming your shares or dividend from IEPF then, old address proof is also Mandatory, as per prevailing IEPF norms.The hard copy of the above documents is required to be sent to: Focus AddressFor securities held in electronic form, the change in details has to be registered with your depository participant. Important points to be noted:The identity and address proof should be legible and in the name of the first registered account holder.Investors are informed that after verification of the documents submitted and in case of any differences observed, additional procedures/documents may be further called as part of KYC.Note: If your Folio is not KYC Compliant we shall not be able to process any service request.For Name correction in the physical certificate, you should forward the duly signed Form ISR-4 along with the original certificate(s) and a self-attested copy of the PAN with the date, and kindly courier/post the same to us, at the following address:Focus Address

-2023 View/Download Fillable-Transmission/Name Deletion form

View/Download -Fillable-Application form for Name Deletion/Transmission / Transposition

-2023 Exchange of Share Certificate

Please note, SEBI vide their Circulars have mandated:Furnishing of PAN, Address with PIN code, Email address(optional), Mobile No., Bank Account details, Specimen Signature & Nomination by holders of physical securities (collectively, called KYC requirement), and that “From January 1, 2022, RTAs shall not process any service requests or complaints received from the holder(s)/claimant(s), till PAN, KYC, and Nomination documents/details are received. Click on the link to download a copy of the SEBI Circular dated 16th March 2023. For Physical Folios who are Not KYC compliant, please comply with:The relevant Forms for registering /changing KYC details and Nomination, viz. Forms ISR-1, ISR-2, ISR-3, SH-13, and SH-14 as well as the SEBI circulars are available on our website -> KYC-Formats In order to make the folio KYC compliant, the holder is required to submit the duly completed KYC Forms along with supporting documents as indicated therein. Kindly also ensure that your Aadhaar is seeded with PAN, for the folio to be KYC Compliant. Completing to a full KYC is easy. Simply drop into our office location on any Business Day for (IPV):In-Person Verification with our officer as per your convenience, with the set of original documents and self-attested copies of documents to be submitted.Alternatively, you may also courier the self-attested copies with the date, and the courier the complete set of KYC documents to our office address.Focus AddressIn case you wish to comply with the KYC, using E-sign, do mail us from your registered e-mail id only. Alternatively, the e-signed documents are also accepted at our web portal. Please click the link -> KYC ComplianceFor KYC compliant folio, please submit the following:For the exchange of certificates on account of a scheme of merger/amalgamation/capital reduction or change in FV, or on account of torn or defaced certificates, the security holder shall issue a request letter duly signed as per the specimen signature registered with the company/RTA, containing basic essentials of the shareholder such as Company Name, Folio Num, Name(s) of the Shareholder's and shall complete the following processes:we request you to fill in all the information as desired in Form ISR-4 along with a self-certified copy of PAN of the first-named holder of securities along with the original securities certificates to the office of RTA situated at,Focus Address__Read__more__Hence, upon surrender of the old share certificates of the company, we shall issue a Letter of Credit (LOC) as per the Client Master List (CML) provided to us.If you do not have the old certificate, you can write to us with the request letter signed by the shareholder/s, with a self-attested copy of the PAN, for the procedure to issue of duplicate. Once the procedure for duplicate issuance is complied with from your end, we will then proceed to issue the LOC as per the CML provided.Null and Void Scheme:Please note that pursuant to the scheme of merger/amalgamation announced by the company, shareholders were allotted shares in the new entity in a predefined ratio, announced by the company.The new share certificates were already dispatched to all the shareholders as of the record date, without having to surrender the old certificates., under the Null and Void scheme. You would have received the same. However, if you have not received the same, kindly write back to us with a self–attested copy of your PAN, for further details and for the procedure of issuance of duplicate.Note: If your Folio is not KYC Compliant we shall not be able to process any service request:The identity and address proof should be legible and in the name of the first registered account holder. Investors are informed that after verification of the documents submitted and in case of any differences observed, additional procedures/documents may be further called as part of KYC.For the exchange of physical certificates, you should forward the duly signed Form ISR-4 along with the original certificate and a self-attested copy of the PAN of the first holder with the date, and kindly courier/post the same to us, at the following address;Focus Address

-2023 Non receipt of Certificates

Please note, SEBI vide their Circulars have mandated:Furnishing of PAN, Address with PIN code, Email address(optional), Mobile No., Bank Account details, Specimen Signature & Nomination by holders of physical securities (collectively, called KYC requirement), and that “From January 1, 2022, RTAs shall not process any service requests or complaints received from the holder(s)/claimant(s), till PAN, KYC, and Nomination documents/details are received. Click on the link to download a copy of the SEBI Circular dated 16th March 2023. For Physical Folios who are Not KYC compliant, please comply with:The relevant Forms for registering /changing KYC details and Nomination, viz. Forms ISR-1, ISR-2, ISR-3, SH-13, and SH-14 as well as the SEBI circulars are available on our website -> KYC-Formats In order to make the folio KYC compliant, the holder is required to submit the duly completed KYC Forms along with supporting documents as indicated therein. Kindly also ensure that your Aadhaar is seeded with PAN, for the folio to be KYC Compliant. Completing to a full KYC is easy. Simply drop into our office location on any Business Day for (IPV):In-Person Verification with our officer as per your convenience, with the set of original documents and self-attested copies of documents to be submitted.Alternatively, you may also courier the self-attested copies with the date, and the courier the complete set of KYC documents to our office address.Focus AddressIn case you wish to comply with the KYC, using E-sign, do mail us from your registered e-mail id only. Alternatively, the e-signed documents are also accepted at our web portal. Please click the link -> KYC ComplianceThe certificate may not have been received by you due to any of the below reasons:-1). The certificate was dispatched but could not be delivered to your address due to either an incomplete address or returned undelivered as the door was locked or no such person was at the address.2). The dispatch of certificates may be held back due to reasons like Non-completion of KYC (Know your customer), Incomplete address, or stop mark recorded against the folio.Alternatively, you may also contact us at the following address or email id:Focus AddressEmail-R-T__Read__more__Please write to us with the details of the company and folio number with a copy of your self-attested PAN CARD, for us to check and revert to you. If your folio, is not KYC compliant, do visit our website and complete forms related to -> KYC-Formats.For Non-Receipt of securities certificate on account of Replacement/Renewal/Exchange of certificate/Split in face value of shares, we request you to comply with Form -ISR4 and complete forms related to -> KYC-Formats. Important points to be noted:  The identity and address proof should be legible and in the name of the first registered account holder.Investors are informed that after verification of the request letter submitted and in case of any differences observed, additional procedures/documents may be further called as part of KYC. Note: If your Folio is not KYC Compliant we shall not be able to process any service request.

Are all the bonds / Debenture are secured ?

The investor is requested to find the details in the Prospectus / Information memorandum whether they are issued as secured or unsecured.

Can I have the Contact Centre E-mail and Tel-Number.

Email-R-TEmail-BondsEmail-Public-Issues

Can I withdraw my money invested in bonds anytime before maturity?

For Listed bonds, If you want to sell them before maturity, you can do so in the secondary market at market price(market price may vary from par-value). For Private placement requested to refer the offer document of the Issuer

From where can I get specific details about the Terms of Issue of the debentures I hold?

The issuers compiles the terms of Issue for every series / issue of the debentures / bonds. Investors can refer to the terms of the issue from the offer documents posted by the issuer on their website or write to the issuer directly.

How can I convert my electronic holding into paper form?

An investor can choose to reconvert his electronic holding into physical form at any time through his DP. However, some companies issue securities in Demat mode only. Hence physical certificates are not issued. Investors are requested to refer the offer document before submission of debenture certificates for Remat.

How can I update the Bank Details in my securities held in physical form ?

For securities held in physical mode complete Form ISR-1 duly signed by the holder(s) stating the details of the Folio nos. / Name of the company, and other details along with;(i) bank details (Bank account number, Bank and Branch Name and address, pin code & IFSC, MICR details),(ii) self-attested copy of the PAN card and(iii) original canceled cheque leaf.Alternatively, Client Master List (CML) with bank details to update the same, to be sent toEmail-R-TFor dematerialized holdings, please reach out to your Depository Participant, by submitting the requisite forms/documents to your DP

How do Bonds give higher returns than FDs? Is there any risk involved?

FD rates are lower than bond interest rates. Banks have to maintain CRR(Cash Reserve Ratio) as per regulations laid down by the central bank. The banks have to reserve a portion of capital received via FDs; the entire capital cannot be lent. This reserved capital can be utilized to supply closures (or pre-closures) in FD. Such constraints are not there on banks on the capital that is raised via bonds.Read moreAlso, only a fixed amount of funds can be raised by a particular Bond tranche'. So the interest to be paid on this fund amount remains fixed and quantifiable to the Bond issuer. Also, to elicit investor interest to invest in Bonds, the issuer keeps the Bond rates higher than Bank FD rates. For FDs, there is no limit to the amount of deposits that a bank can take. Being able to service high-interest rates on such ever-growing deposit rates is financially non-viable. Given these reasons, Bonds can offer better returns than Bank FDs.

How do I convert my paper certificates into an electronic holding and will I continue to receive Interest?

To dematerialize your holding, you should first open an account with a Depository Participant (DP) of your choice. You may then hand over to your DP, the certificates along with the 'Dematerialisation Request Form' (DRF). Only the securities registered in your name can be submitted for dematerialization. Your DP will then send the DRF and the certificates to us and an electronic request will also be sent through the depository network reconfirming the same. We will verify the documents and if found in order, the dematerialization request will be confirmed to the Depository who will in turn inform your DP. In the books of the Company, your folio with us will be debited and the account of Depository will be credited in respect of such dematerialized securities.Read moreThe Depository in their electronic records will credit the account of your DP who will then credit your account with the number of securities that have been dematerialized and the securities will thereafter be held in electronic form. The interest will be issued to the beneficial owners i.e. the accountholders who hold the securities in electronic form as on the Record date identified by the Issues. The interest amounts, when issued, will be credited to your bank directly as per the Bank details updated with your DP.

How do I Record Change of Address for Securities held in physical mode ?

For securities held in Physical Form, you are requested to complete the details as mentioned in Form ISR-1, duly signed by the holders(s) of the securities, quoting the folio number, and name of the company, and providing the new address with pin code along with any one document listed below should be sent toEmail-R-T For processing the request for change of address or address is not available in the folio, then the RTA shall obtain the following documents:Valid Passport / Registered Lease or Sale Agreement of Residence / Driving License / Flat Maintenance bill where additional self-attested copy of identity proof of the holder/claimant may be obtained to process the request;Read moreUtility bills like Telephone Bills (only landline), Electricity bills, or Gas bills - Not more than 3 months old;Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory / Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;For FII / sub-account, Power of Attorney given by FII / sub-account to the Custodians (which are duly notarized and/or apostilled or consularised) that gives the registered address will be accepted. Proof of address in the name of the spouse where an additional self-attested copy of identity proof of the holder/claimant may be obtained to process the request;To avoid rejection kindly ensure to sign Form ISR-1 as per specimen signatures registered with the company.Client Master List (CML) of the Demat Account of the holder/claimant, provided by the Depository Participant.In case you are holding the shares in Demat form, the request for a change of address should be addressed to your DP only.

How do I Register Tax forms such as Form 15G/H?

You are requested to visit our website and select the option Tax Exemptions Registration.The companies which are presently availing online facilities for submission of Tax Exemptions forms shall be available in the said option. Select the desired Company and fill up the necessary information and upload the duly completed Tax Exemption forms, signed by the investor. Kindly quote the DP/CL or Folio number on top of the form, for ease of reference.In the event the said company is not available for online submission of tax forms, kindly courier the same to the office of RTA/company the duly filled tax form(s)Focus AddressEmail-R-T

How do I transfer physical securities?

As per the SEBI regulations, if one holds shares in the physical form, he/she would not be able to transfers the securities in physical form and the Company shall not process such request unless the securities are held in the dematerialized form with a depository. Should you wish to transfer, we request you to get the physical shares dematerialized.

How do I transmit securities held in demat mode?

For securities held in Demat mode, please contact your depository participant.

How redemption amount will be paid upon maturity of bonds.?

Redemption notice is sent to the investor by email / physical letter intimating upcoming redemption and requesting to check the address and bank details available in the records of the RTA and update the same in case of any change prior to a pre-fixed cut-off date. All such requests received for updation received prior to the cut-off date will be processed and the payments will be made as per the updated details.

I am the legal heir in respect of the sole holder who is now deceased. How do I transmit the securities held in physical mode?

If the bonds were held in the sole name of the deceased bondholder the same can be transmitted in the names of maximum three joint legal heirs. With the introduction of Form-ISR-4, transmission of physical securities shall be done only in demat form, thereby legal heirs are requested to quote their demat account, or open one for the purpose of transmission.Where securities are held in the sole/joint name(s) of the deceased holder(s), without nomination, please submit the following:-1. Transmission Request : ( Form ISR-5 ] duly signed by legal heir(s)/claimants.2. Original death certificate OR: copy of the death certificate attested by the legal heir(s)/claimant(s) subject to verification with the original (only in case of in-person verification) OR a copy of the death certificate duly attested by a Notary Public or by a Gazetted Officer.3. Self-attested copy of PAN Card of the legal heir(s)/claimant(s), issued by the Income Tax Department.4. Original security certificate(s).5. Original canceled cheque leaf which is issued in the name of the first legal heir/claimant or:latest copy of the Bank Statement/Passbook with details of Bank Name, Branch, Account Number, and IFSC, of the first legal heir/claimant, duly attested by the Bank Manager.6. Nomination Form SH-13 or Declaration for opting out of Nomination as per Form ISR-3 signed by all the Legal heir(s) / Claimant(s).7. Client Master List (CML): of the Demat Account of the Legal Heirs(s) / claimant(s), if the applicants of the transmission request form have a Demat account, provided by the Depository Participant, in order of the names as per the Form-ISR-5.8. Affidavit (Annexure-D): A Notarized Affidavit from ALL legal heir(s) / claimant(s): made on non-judicial stamp paper of appropriate value in the prescribed format, to the effect of identification and claim of legal ownership to the securities. However, In case the legal heir(s)/claimant(s) are named in any of the documents for transmission of securities, such as Succession Certificate or Probate of Will or Will or Letters of Administration or Legal Heirship Certificate (or its equivalent certificate), an Affidavit from such legal heir(s)/claimant(s) alone shall be sufficient). Separate Affidavits are to be executed by the legal heir(s) / claimant(s).For securities whose value exceeds Rupees Five lakhs(#) additional documents as stated in point 9 are to be provided:The value shall be ascertained: on the basis of the closing price at any one of the recognized stock exchanges a day prior to the date of submission.__Read__more__9. Copy of any of the following:a. Succession Certificate OR b. Probate of Will OR c. Will, along with a notarised indemnity bond from the legal heir(s)/claimant(s)  to whom the securities are to be transmitted, as per the format specified and provided in Annexure E OR d. Letters of Administration ORe. Court Decree OR f..Legal Heirship Certificate (or its equivalent certificate) issued by a competent Government Authority to be accompanied with,:(i) Notarized Indemnity Bond- As per the format provided in Annexure E:made on non-judicial Stamp Paper of appropriate value in the prescribed format, indemnifying the Listed entity /Share Transfer Agent. Bond of Indemnity is to be executed jointly by all the legal heir(s) including the claimant(s); and(ii) No Objection from all the Non-Claimants (remaining legal heirs)- As per the format specified and provided in Annexure F:stating that they have relinquished their rights to claim for transmission of securities, duly attested by a notary public or by a Gazetted Officer.For securities whose value does not exceed Rupees Five lakhs(#) and the  documents as mentioned in point 9 are not available such as:__Read__more__ Copy of any of the following:a. Succession Certificate OR b. Probate of Will OR c. Will, along with a notarised indemnity bond from the legal heir(s)/claimant(s)  to whom the securities are to be transmitted, as per the format specified and provided in Annexure E OR d. Letters of Administration ORe. Court Decree OR f..Legal Heirship Certificate (or its equivalent certificate) issued by a competent Government Authority.The legal heir(s)/claimant(s) may submit the following documents:(i) No Objection Certificate in the format provided in Annexure F: made on non-judicial Stamp Paper of appropriate value in the prescribed format, and is to be executed jointly by all legal heir(s) stating that they do not object to such transmission; OR Copy of Family settlement deed executed by all the legal heir(s), duly attested by a Notary Public or by Gazetted Office; and(ii) Notarized Indemnity Bond-  As per the format provided in Annexure E:made on non-judicial Stamp Paper of appropriate value in the prescribed format, indemnifying the Listed entity /Share Transfer Agent. Bond of Indemnity is to be executed jointly by all the legal heir(s) including the claimant(s)Note:All Documents for transmission as may be applicable, duly attested by the legal heir(s)/claimant(s) are to be submitted, subject to verification with the original or duly attested by a notary public or by a gazetted officer. Name and full address of the attesting authority for Indemnity bond and Affidavit must be mentioned. The attesting authority should affix their seal, notarial /court fee stamps and mention the registration number, as applicable. The Notary Public should mention Book No. and Serial No. against the notarization on Affidavit and Indemnity. Affidavit/Indemnity to be purchased in the name of holder(s)/applicant(s) and to be notarized and executed before the Notary Public/Gazetted Officer. The date of execution and attestation should be the same. The Company shall issue a Letter of Credit upon successful execution of the above documents. For securities held in electronic form, please contact your Depository Participant.

If the Physical holding is in joint names and either of the holders is deceased, what is the procedure for deletion of name?

The procedure to be followed for deletion of name in the records is as below: Letter duly signed by the surviving joint holder(s), along with Form ISR-4. Original bond certificates for the entire holding to enable deletion. Annex a duly attested copy of the death certificate of the deceased bondholder, either by a Notary Public or by a Special Executive Officer. Furnish us with a letter from the Bank Manager of the bank where you have an account, identifying you and attesting your signature along with your account details as per Form ISR-2.Read moreAnnex a self-attested copy of the PAN card of surviving bondholders Provide us, a copy of any one document each from (a) & (b) below, duly attested by Special Executive Officer or Notary Public or Your Bank Manager. Driving Licence or Passport or Election Card Ration Card or Latest Electricity Bill or Telephone Bill or Employer's TDS certificate in Form 16 Lodge your request after complying with the abovementioned requirements, after which we will take up the process further.

I have applied for debenture in physical mode but I have not received the debenture certificate yet, what should I do?

The certificate would not have been received by you due to any of the below reasons:- It has been dispatched but could not be delivered to your address due to either incomplete address or it is returned undelivered as door is locked or no such person at the address. The dispatch of certificates is held back due to reasons like Non completion of KYC (Know your customer), Incomplete address. For such cases please contact the RTA at the address/ Phone Nos. / email id mentioned on our website.

I have old certificates? How do I exchange with new certificate?

For exchange of certificates on account of capital reduction or change in FV, or on account of torn or defaced certificates, kindly write back to us for share-related certificates to Email-R-T and for bonds related to Email-Bonds

is any one availble on chat?

Presently the IDIA Chatbot service is automated, and there is no human involved. The facility to chat with an agent is coming soon.

Is there a lock-in period for Bond? Can I withdraw my money invested in bonds anytime before maturity?

Bonds are 100% tradable securities. This means that there is no lock-in on your bond investment. If you want to sell them before maturity, you can do so in the secondary market at market price(market price may vary from par-value).

I want to know the details of Interest /Maturity payments paid to me on the debentures held by me. Where should I enquire?

You can view your interest details on the Issuer Companies website. Alternatively you can contact us on the below: Email-Bonds

I want to talk to an agent / contact center

We are in the process to launch this facility, till then kindly contact us on the following:Focus AddressEmail-R-T

The interest amount received by me is lower than what I received earlier month, why is it so?

The difference in amount could be because of the day count convention or as per the terms of the offer document.  Please refer to the offer Document of the Issuer for more details. Alternatively you may write to:Email-BondsFocus Address

What are bonds and debentures?

Bonds and debentures are debt investment instruments with a Fixed Rate of Return and Fixed Maturity Period. While Bonds are securities that are mostly issued by the government, debentures are always issued by corporations. Bonds and Debentures are issued by these entities to raise money from investors as loans used to fulfill business objectives like entering new markets, starting a new project, or scaling existing businesses. For every bond/debenture issue, fixed interest payments (Coupons) are made regularly on pre-specified dates. The principal loan amount(face value per unit of Bond/ Debenture) is paid back on the pre-specified maturity date.

What are the differences between Bonds and Debt Mutual Fund?

Bonds are debt securities issued by entities like corporates or government organizations for a predefined duration. Debt Mutual Funds are Mutual Funds that invest in debt securities such as Bonds, Debentures, Commercial Papers, and other Fixed Income Securities. Debt MFs are an indirect way of investing in Bonds. For fixed investment needs, it is always better to invest in Bonds than Debt MFs.

What is a Bond?

Bond is an instrument showing the indebtedness of the borrower (issuer company) to an investor evidencing the investment. A bondholder is a creditor of the issuer and not a shareholder.

What is a Bond / Debenture ?

A Bond / Debenture is a debt instrument where the issuer of the security agrees to repay the investor, the amount borrowed and interest, over a specified period of time.

WHAT IS BOND MARKET?

The bond market is a financial market where debt securities are issued and traded. The issuers sell bonds or other debt instruments in the bond market to fund the operations of their organizations.

What is customer care number?

You are requested to write to us / get in touch on the followingFocus AddressEmail-R-T

What is Day count convention?

Day count convention refers to the norm for considering the days for which the interest is computed. Interest is normally computed on a 365 days a year basis on the principal outstanding on the NCDs. However, if period from the Deemed Date of Allotment / Anniversary date of Allotment till one day prior to the next anniversary / redemption date includes February 29, interest shall be computed on 366 days a-year basis, on the principal outstanding on the NCDs. It is highlighted that each Issuer may have a different norm for ascertaining the day count convention. Investors are advised to refer to the relevant Offer Document of the Debentures to know the specific details.

What is Face value of a Bond / Debenture ?

Face Value (FV) is also known as the par value or principal value. Coupon (interest) is calculated on the face value of a bond. FV is the price of the bond, which is agreed by the issuer to pay to the investor on the maturity date.

What is Maturity date?

The maturity date is the date on which the principal and due interest amount are paid to the bondholder by the issuer. The maturity date defines the lifespan of the bond. The bondholder is entitled to receive interest payouts till the date of maturity. After the maturity date, the contractual obligation of the bond issuer gets terminated. ”Call Date” and “ Maturity Date” are mentioned in the term sheet.

What is Maturity / Redemption Value?

Maturity / Redemption Value is the amount paid by issuer on the Maturity date other than coupon payment is called redemption value.

What is the difference between a Bond and a Debenture ?

Debenture is a long-term security yielding a fixed rate of interest issued by a company. These can be secured by the assets of the company or unsecured. A bond is an instrument yielding a fixed interest income generally issued by a government organization. However, these two terms and generally interchanged in common parlance.

What is the difference between buyback and redemption ?

Buyback is an early exit option to redeem the bonds after a particular period but prior to the maturity of the bonds. If the option to redeem the bonds prior to the maturity date is available with the Issuer, it is called call option. If the option is available with the investor, it is called a put option

What is the relevance of Record date?

Payment of Interest is made to those NCD holders whose names appear in the register of Debenture Holders (or to first holder in case of joint-holders) as on a Record Date.

What should I do to receive interest payments in Electronic mode (NECS / Direct credit /NEFT / RTGS )

If you are holding in Demat mode you should get your Bank details including 9 digit MICR and the IFSC code updated with your Depository participant or if you hold securities in physical mode you can forward the request letter duly signed, along with Original Cancelled Cheque to us, at the addressFocus AddressAlternatively, the Bank details registration format such as Form ISR-2 can also be downloaded from our website.

Why am I receiving my Interest in physical mode ?

Interest is paid in physical mode in case incomplete Bank details are registered with your Depository participant if you hold securities in Demat mode or if the securities are held in physical mode, and your folio is still not KYC compliant.

Why should I choose bonds over fixed deposits?

Bonds and FDs are both low-risk securities. Still, you should choose Bonds over Fixed Deposits because :Bonds provide higher interest returns than FDs.Bonds are tradable, but FDs are not.Bonds can satisfy various financial requirements like generating a regular income stream, savings tax on interest income, savings tax in capital gains, etc. FDs offer no such facility.

Why should I invest in Bonds?

Here are a few points that justify why you should consider investing in Bonds.Bonds provide a fixed returnBonds are unaffected by the market fluctuationsBonds give higher returns than FDsThe perceived level of risk in Bonds is low. In fact, it's lower than that of Debt Mutual Funds

Why should I invest in the Fixed Income Market (Bonds and Debentures)?

Bonds’ fixed income market can provide investors returns as high as 9 - 10% per annum or more.Investments in Bonds and Debentures are more rewarding and reliable mode of growing your money than the existing options of fixed deposits and mutual funds. Moreover, you get the additional benefits of minimum to low risk (for AAA to A Bonds), capital growth, earning a regular income, tax-free income, and tax-saving options available in this investment segment.

Why would I receive interest payment in physical mode although I have furnished Bank details with my Depository participant (for electronic holdings) and the RTA for physical holdings?

This could be due to any of the following reasons: MICR code not updated IFSC code not updated Incorrect account number updated. Bank name and branch missing.

ADDITIONAL TIER I BONDS (AT1 BONDS)

Tier I Bonds also called Perpetual Bonds. As per BASEL III norms, theoretically, these bonds can be carried on till infinity. In reality, they come with a call option after 5 years or 10 years from the date of issuance. It is a popular option among Banks to raise capital to meet their core capital (Tier1 capital) needs as instructed by RBI.This category carries considerable risk and hence pays high-interest rates to investors. The issuer can skip interest payments if the current year business is in the loss. In dire conditions, it can get converted to equity (with approval from RBI). Hence they are also called “quasi-equity”. If RBI approves it can be written off up to the full value as well (with approval from RBI).Note: In case of winding up of the issuer, if any payment is to be made to Tier I capital holders, AT I bondholders are paid before equity holders. However, in case the Bank is getting merged with another Bank due to its non-viable business state, then AT1 Bonds can be written off fully while keeping the equity capital unaffected.

Can there be any risk in Bond Investment?

Considering the Risk Pyramid, Bonds fall into the category of low-risk securities just like Fixed Deposits. There are a couple of risks involved.Default risk: The loss that an investor faces when issuer defaults(fail to return principal amount or Interest payments or both)Liquidity risk: This loss comes into picture only when an investor wants to sell bonds before maturity. This loss is incurred by the investor when he/she finds no buyer for their bonds and hence sells them at a discount.Read moreInterest-rate Risk: If interest rates increase, the price of the Bond decreases. At this time, the investor wants to sell the bonds he/she has to sell at a discount price. However, the flip side is that, if the interest rates in the economy decrease, bonds’ selling price will increase. At such a time, an investor can make capital gains by selling his bonds at a premium to his buy price.

Comparison with Fixed income instruments - Bonds vs. PPF vs. FDs vs. ETF.

Here are a few Fixed Income Instruments.Bonds: They are pure fixed-income investment options. They come with a fixed annual return and fixed maturity period.Public Provident Fund: PPF is a saving scheme offered by the Central Government.Fixed Deposits:These instruments are offered by banks and non-banking financial organizations that return fixed interests.Exchange-Traded Funds:ETFs consist of a set of underlying securities and manage market fluctuation. They have passively managed funds and have low volatility.Read moreAll fixed income instruments fall into the category of low-risk instruments. ETFs have no maturity and have low volatility. The maximum amount that can be invested in PPF is 1.5 lakhs. FDs are not tradable.Whereas Bonds have fixed maturity, there is no limit on investment amount and are tradable.

INTERNATIONAL SECURITIES IDENTIFICATION NUMBER

International Securities Identification Number(ISIN) is the universally recognizable unique code given to securities. The respective country’s National Numbering Agency provides ISIN. In India, SEBI has assigned ISIN’s responsibility to the National Securities Depository Limited (NSDL). RBI regulates NSDL. ISIN consists of 12 alphanumeric digits: the first two digits represent the country’s code, the next nine digits are computer-generated security code, and the last digit is the check number. ISIN helps in preventing counterfeiting and forgery.

What are NCDs? Explain the difference between Bonds and NCDs.

NCD stands for Non-Convertible Debentures. NCDs are debt instruments that provide fixed returns. NCDs are issued by Corporates to raise capital.NCDs and Bonds are both debt instruments that return fixed income to the investor. The few differences between NCDs and Bonds are listed below.Read moreNCDs are issued by Corporates, whereas Bonds are issued by Government entities.In most cases, NCDs offer a higher interest rate than Bonds and are secured while NCDs can be secured or unsecured.Bonds are considered senior debt securities; hence during liquidation, bondholders are paid first and then debenture holders.

What are the different types of Bonds?

Here is the list of different types of Bonds available.Government bonds: Government bonds are issued by the Central Government. They are also known as Government Securities or ‘'GSecs’.’ These Bonds carry the highest level of safety guaranteed by the Central Government and hence do not carry any credit rating.Read moreState Bonds: The various States issues state Bonds in India. The States raise money via this Bond route regularly. These Bonds are called ‘State Development Loans’ or SDLs. Like GSecs, they are also perceived to be of the highest safety level and hence do not carry any credit rating.Municipal Bonds:Municipal Bonds are issued by local or state-level government agencies to fund development activities like city development, urban transportation, healthcare infrastructure, etc. These Bonds are popularly called as ‘Muni Bonds.’Read morePublic Sector Bonds: Public Sector Bonds are issued by organizations where the government holds more than 50% ownership. Example: NHAI, REC, ONGC, etc.Corporate Bonds:The large corporations and financial institutions issue these bonds to capitalize on their business operations. They are rated by various credit rating agencies based on the risk profile of the bonds.Taxable Bonds: All Corporate Bonds fall into this category. The interest income earned from investments in these Bonds is taxed as per the investor’s income tax slab.Tax-Free Bonds:The PSU units issue Tax-Free Bonds. The interest income earned from investment in these Bonds is 100% tax exempted.

WHAT DOES BASIS POINTS (BPS) MEAN?

One Basis Point(BPS) is equal to 1/100th of 1%. It is a standard unit of measurement used to indicate a change in bond yield or percentages in the bond market. Small changes in yield or interest rates make a huge impact. Measuring and expressing such minute changes in the market is essential, and the same is done in terms of BPS.

WHAT DOES CREDIT RATING MEAN FOR BONDS?

A credit rating is an evaluation of the credit risk of a prospective debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting.

What does the term Bond Duration mean?

Bond Duration measures the percentage change in a Bond’s price with a 1% change in its yield level. For example, if a Bond has a duration of 5 years, then it means that for a 1% change in its yield, the Bond price will change by 5%.Say Bond Price is 100, Bond Yield is 6%, and Bond Duration is 5 years.Case 1 : Yield increase : +1% , Bond Price : 95Case 2: Yield decrease: -1%, Bond Price: 105Read moreAs you can see, bonds with higher duration values will be more susceptible to large price changes when their yields change due to changes in market interest rates.Note: Bond Price and market interest levels are inversely related. When interest rates fall, bond prices rise. When interest rates rise in the market, bond prices fall.

WHAT IS ACCRUED INTEREST?

This is the interest earned by an investor for a given period of time,The bond issuer pays the bondholder a fixed interest on a predetermined schedule. However, if a bond were sold between its interest payment dates, the purchaser would have to pay the market price of the bond plus the appropriate fraction of the accrued coupon interest earned but not yet received by the party selling the bond.Example: A has a 1 unit of a Bond with a face value of Rs 1 Lac and a coupon rate of 10% (payable annually). Every year A receives Rs 10 K from the issuer on a specific date. Then, after 6 months from one such payment, A sells this Bond to B. B then has to pay Rs 5K as an accrued interest to A along with the principal value of the Bond to A.

What is BOND CONVEXITY?

The measure of the change in the bond duration for every 1% change in the market interest rates is called the Bond Convexity.There can be an accelerated change in bond price with a change in the interest rate in the market. As an example, say 1% change in the market interest rate causes the Bond price to change by x% then 2% change in the interest levels, may cause the Bond price to change by more than 2X. It’s not a linear relationship. This measure, called convexity, helps understand and predict bond price movements in the market with fluctuating interest rate regimes.Note: There are different kinds of bond durations. The bond duration that we are discussing here is called”Modified Bond Duration.”Bonds with a positive convexity gain a higher price with a fall in yields than an increase in yields. Bonds with negative convexity lose a greater price with an increase in yields than a fall in yield. The higher the Convexity, the higher will be the market risk.

WHAT IS BRICKWORK RATINGS MEAN?

Brickwork Ratings is a SEBI registered credit rating agency that has also been accredited by RBI and impaneled by NSIC. Brickworks has rated issues of a large number of banks including SBI, Bank of Baroda, Bank of India, Canada Bank, Corporation Bank, Punjab National Bank, Andhra Bank, and many others.

WHAT IS CONSIDERATION AMOUNT IN BOND?

The loan amount or principal paid by the bond investor is a consideration, in exchange for the borrower or bond issuing company’s promise to repay the principal and interest as per the agreed clauses.

WHAT IS PAR-VALUE AND MARKET PRICE FOR BONDS?

Par value is the price at which the Bond issuer issues a Bond unit. Par value is also called the face value. When a bond matures, the Bond issuer returns back the face value of the bond to the bondholder along with any outstanding interest payment.The interest payouts are also calculated based on the par value of the bond. However, bonds need not be traded at par value; it can vary from par value. The price at which bonds are traded between buyers and sellers is called market price. Par value of the bond is always fixed: par value is one of the characteristics of bonds that define bonds as “fixed income instrument.”Read moreThe interest payouts are also calculated based on the par value of the bond. However, bonds need not be traded at par value; it can vary from par value. The price at which bonds are traded between buyers and sellers is called market price. Par value of the bond is always fixed: par value is one of the characteristics of bonds that define bonds as “fixed income instrument.”

WHAT IS PRIMARY MARKET?

The Capital market where companies or governments directly issue securities (debt-based or equity-based) to raise funds is called Primary Market. In the primary market, the issuer sells securities at predetermined prices. The buyers in the market can be financial institutions, corporates, mutual funds, and individuals.Consider this market as the place where the security is being sold for the first time to buyers.

WHAT IS SECONDARY MARKET?

The secondary market is the capital market where securities are traded among investors. Trading can happen between Financial institutions, individual investors, or both. The issuer doesn’t participate in trading. The price of the securities in the Secondary Market is dependant on current demand and supply.The advantage of the Secondary market is, it facilitates trade between investors and makes securities available to investors who could not participate in the Primary Market. The secondary market plays a vital part of ensuring liquidity. This away helps the issuing entity to raise capital in the future as investors are assured of liquidity/ exit option when needed.

WHAT IS SETTLEMENT AMOUNT?

The settlement amount is the amount the buyer has to pay to own the bonds. The settlement amount is the sum of the market price of the Bonds and accrued interest.Settlement Amount = Market Price + Accrued InterestAccrued interest is the amount that the borrower( bondholder) is supposed to get from the bond issuer, but it is yet to be paid. If the present bondholder sells his Bond, he has to get the interest until the date of the sale. Read moreThere can be a time gap between the last coupon payout until the date he sells it for which he should be paid interest in addition to the market price of the Bonds. The next interest payout goes to the new bondholder.Daily Interest = Annual Coupon Payment / Number of days in the yearAccrued Interest = Daily Interest X Accrued interest period

WHAT IS TERM SHEET?

The term sheet is a nonbinding agreement between the issuer and bondholder. It specifies the bond features such as maturity date, coupon, interest payment, liquidation preference, callability, and convertibility. Though the term sheet is nonbinding in nature, it serves as a basis for other legally binding agreements. Term sheets can reduce conflicts between the parties. Hence expenses associated with premature legal actions can be reduced with a term sheet.Read moreThe term sheet is a nonbinding agreement between the issuer and bondholder. It specifies the bond features such as maturity date, coupon, interest payment, liquidation preference, callability, and convertibility. Though the term sheet is nonbinding in nature, it serves as a basis for other legally binding agreements. Term sheets can reduce conflicts between the parties. Hence expenses associated with premature legal actions can be reduced with a term sheet.

Whats is the difference between BID PRICE AND ASK PRICE?

Market prices depend upon the demand and supply of the bonds and the credit rating of the issuer. During a transaction, buyers and sellers bargain to decide the price of the bond. The buyer’s maximum price is the “bid price” (which means the buyer is not willing to pay beyond the bid price). The lowest price quoted by the seller is the “ask price” (means the seller is not willing to sell the bonds below the ask price).Note: Narrow gap between the “bid price” and “ask-price” is called the spread. A lower spread indicates that a bond is actively traded and hence is liquid. Illiquid Bonds (lower ratings, mostly below A) typically have large spreads.

Do I have to submit 15G/H for every Financial Year ?

Forms15 G/H is valid for only one financial year and a fresh form 15G/H declaration has to be submitted every year for securities held in physical mode. The duly completed forms should reach us after 1st of April every year, but before record date, to avoid deduction of tax at source.

Do I have to submit form 15G/H if securities are in Demat mode?

YES, Form 15 G/H is also applicable for securities held in physical form. For securities held in demat form.

I am not a taxpayer, so am I required to file a declaration for non-deduction of tax at source for my interest amount?

As per the current provision of Income Tax, Bonds / Debentures held in physical mode on which interest payable in the financial year exceeds Rs. 5000/- , are liable for deduction of tax at source. A declaration in Form 15G/H for claiming tax exemption from interest paid is required to be submitted to us. The form should be duly filled before submission along with Folio No. / ISIN /Company name and the signature of the first holder. Incomplete forms are likely to be rejected.

If I hold in Demat mode, is the interest earned taxable?

Income tax is not deductible at source as per the existing provisions of section 193 of the I.T Act on interest on debentures in respect of the following for Resident Debenture Holder. “On any securities issued by a company in a dematerialized form and is listed on recognized stock exchange in India. (w.e.f. June 1,2008).”

I want to correct my TDS form filed with you? Kindly let me know the process.

You can write to us quoting the Company Name, Folio / DPCL & Investor name toFocus AddressEmail-R-T

What is certificate number while submitting / filling of form 15 G/H ?

The Certificate option is only meant if your mode of holding securities is in physical form.For DP/CL (demat segment) this mode will be disabled upon click of DP/CL option.

WHAT ARE CORPORATE BONDS?

A security issued by a company in which the company acknowledges that a stated sum is owed and will be repaid at a certain date. A corporate bond, like a government-issued bond, usually pays a stipulated amount of interest throughout its life to the holder.

WHAT ARE FIXED INTEREST RATE BONDS?

A fixed interest rate is an unchanging rate paid on bonds. It remains the same for a predefined period of time (it can apply for the part of the term or entire term).

WHAT ARE GOVERNMENT BONDS?

A government bond or sovereign bond is a bond issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date.

WHAT ARE MASALA BONDS?

Bonds issued by Indian entities in foreign countries are called Masala Bonds. And masala bonds are traded in Indian currency. The minimum maturity period is three years. The country where masala bonds need to be issued, that country must be a member of the International Organisation of Securities Commission. Indian companies who could raise capital via masala bonds are HDFC, NTPC, and Indiabulls Housing.

WHAT ARE PERPETUAL BONDS?

Perpetual bonds are debt instruments that do not have fixed maturity, but they are callable in nature. Since there is no fixed maturity, the issuer must pay coupon payments forever or until the issuer calls the bonds. The bondholder can sell these bonds in the secondary market to get back his/ her investment. Investors are subject to perpetual credit risk, but perpetual bonds offer a higher coupon rate than redeemable bonds. Perpetual bonds are also called “consol bonds” or “perps.”

WHAT ARE TIER I BONDS (ADDITIONAL TIER I BONDS)?

Tier I Bonds also called Perpetual Bonds. As per BASEL III norms, theoretically, these bonds can be carried on till infinity. In reality, they come with a call option after 5 years or 10 years from the date of issuance. It is a popular option among Banks to raise capital to meet their core capital (Tier I capital) needs as instructed by RBI.They carry considerable risk and hence pay high-interest rates to investors. The issuer can skip interest payments if current year business is in the loss. In dire conditions, it can get converted to equity (with approval from RBI). Read moreHence they are also called “quasi-equity”. If RBI approves, then it can be written off up to the full value as wellNote: In case of winding up of the issuer, if any payment is to be made to Tier I capital holders, ATI bondholders are paid before equity holders. . However, in case the Bank is getting merged with another Bank due to its non-viable business state, then AT1 Bonds can be written off fully while keeping the equity capital unaffected.

WHAT ARE TIER II BONDS?

As per BASEL III norms, Banks raise money via Tier II bonds to meet regulatory norms around capital adequacy. Tier II bonds are subordinated debt and hence not first to be paid during the liquidation process. Tier II bonds are senior to Tier I Bonds. Note: When a bank has to write off losses, it will first write off Tier I bonds and then, if required, move on to Tier II bonds. It also can be written off if PONV (point of non-viability) is triggered.

WHAT DOES STAGGERED MATURITY BONDS MEAN?

Staggered Maturity Bonds are the bonds that repay the principal amount in multiple installments. Redemption(repaying the debt) may start at any time before the bond matures, as mentioned in the Information Memorandum (IM). In the staggered maturity process, the principal amount is paid partially along with regular interest payments.Read moreAfter redemption starts, subsequent coupon payments will be made based on the outstanding principal amount. Staggered maturity dates and cash flows are defined by the bond structure that may vary from one tranche to another. The issuer is the one who proposes the structure of the bond.

WHAT IS A MUNICIPAL BOND?

Municipal Corporation or its associate issues bonds to finance public projects such as schools, hospitals, parks, roads, and bridges. These bonds are called Municipal Bonds or Muni Bonds.According to the SEBI’s guidelines, the municipality should not have a negative net worth in three previous years, and it should not have any default in the repayment of debt. Municipality directors should not be enlisted as a wilful defaulter by RBI.Read more Municipal Bonds are generally tax-free. In the case of Municipal Bonds, underlying risk and returns are lower compared to corporate bonds. These bonds traded on all major stock exchanges. Examples of municipal bonds in India are Smart Cities and Atal Mission for Rejuvenation and Urbanisation Transformation.

WHAT IS FOREIGN BONDS?

Foreign firms issue bonds in domestic countries, and transactions happen in domestic currency; such bonds are called foreign bonds. Foreign Bonds carry additional risk, i.e., Currency Risk. They come with a high coupon rate to attract domestic investors. With foreign bonds, the issuer gets exposure to a broader range of investors. If the borrowing cost in the domestic country is relatively less, then foreign bonds can help the issuer to reduce borrowing costs. The examples for Foreign Bonds are Matilda bonds and Bulldog bond

WHAT IS INFLATION LINKED BONDS?

Inflation-Linked Bonds (ILBs) are bonds for which the principal value varies with inflation. The principal rises with inflation and decreases with deflation. Inflation-Linked Bonds are designed to protect investors from inflation risk.Suppose a bond gives annual returns of 7% in a year and inflation is 3 %. Then the real returns are not 7%, but 4%.The yield of ILBs varies with inflation. Investors of ILBs will pay tax on interest earned beyond the inflation rate for that year. ILBs are taxed like other regular bonds.

WHAT IS INVESTMENT-GRADE BONDS?

The set of bonds that carry relatively low risk are called as Investment Grade Bonds. Default risk is very low; hence they are given high credit ratings. Yields for investment-grade bonds are lower than the non-investment grade bonds.Note: In India, “AAA” to “BBB” rated bonds are considered as investment-grade bonds.

WHAT IS ZERO-COUPON BOND?

Zero-coupon bonds do not pay interest, but they are sold at a discount and return full face value on redemption. The bondholder can sell these bonds before maturity at market price. The difference between the purchase amount and face value is the return that the investor gets. If a bondholder sells bonds before maturity, returns will be the difference between purchase value and selling price.Read moreIn the case of zero-coupon bonds, the longer the tenure higher will be the discount. Compared to the regular bonds, the pricing of zero-coupon bonds is more volatile.Note: Investors of Zero-Coupon Bonds are subjected to capital gains tax only.

WHAT ARE HIGH-YIELD BONDS?

The set of bonds that offer relatively much higher yields than investment-grade bonds is called High-Yield Bonds or Junk Bonds. Default risk is high; they carry a low credit rating. To compensate investors for taking the risk, the issuer of high-yield bonds offers a higher interest rate. The price of high-yield bonds is volatile. Companies with high debt ratio issue high-yield bonds.Note: In India, bonds rated below “BBB” are considered high-yield bonds.

WHAT DOES THE TERM CURRENT YIELD MEAN FOR BONDS?

The current yield is the present interest rate that the bond is offering to its owner. This is the rate of interest that a potential buyer can expect if they acquire this bond and hold on to it for a year. Current Yield = Annual interest payment/ Current bond price.

WHAT DOES YIELD TO WORST (YTW) MEAN FOR BONDS?

Yield to Worst is the measure of the lowest yield that a bond can return without defaulting. Yield to maturity can be the same as Yield to Worst but can be more than Yield to Worst. Generally, Yield to Call is the same as Yield to Worst. The calculation of YTW helps the investor understand the minimum returns that a bond can give in worst cases.

WHAT IS THE TERM YIELD TO CALL?

Some bonds have a call option where the bond issuer can redeem the bond before the maturity date. The issuer needs a call option to reduce interest rate risk and avoid damage when interest rates decline. Having a call option will allow the issuer to redeem bonds and reissue them at a lower interest rate. However, there are some preset terms and conditions that have to be met. The calculation of yield to call depends on the coupon rate, the call date, and the price at which the bond was purchased by the holder.

What is the term Yield used for?

The yield is the effective interest rate on bonds. The yield will vary inversely with the market price of the bond.Yield= (Coupon/ Market Price of Bond) X 100

WHAT IS YIELD CURVE?

Yield Curve is a line formed by joining yields having equal credit quality and have varying maturity.There are three types of the yield curve & they are:Normal: Upward yield curve indicates higher yields for bonds with longer maturity. It implies a better economy in the future, i.e., economic expansion.Read moreInverted: Downward Yield represents a lower yield for bonds with longer maturity. This indicates a recession in the future.Flat: A flat curve represents a very narrow gap between the yields of bonds with longer maturity and shorter maturity. This indicates an economic transition.

WHAT IS YIELD SPREAD MEAN FOR BONDS?

The yield spread is the difference between yields of two bonds issued by the same or different issuer and may come with varying maturity, credit rating, and risk. The yield spread is calculated and expressed in percentage or basis points.The ten-year GSecs are considered a benchmark; hence yield from corporate bonds is frequently compared with yield from Gsec. The study of yield spread helps to understand the economy.

WHAT IS YIELD TO MATURITY (YTM) ?

The yield to maturity is the total return expected from a bond if it is held to maturity. In other words, it is the internal rate of return (IRR) of a bond if the investor holds the bond until maturity, and if all payments are made as per schedule.

What are Callable Bonds?

The callable bond is a bond that the issuer can redeem before it reaches the maturity date also known as a redeemable bond. The call date is when a bond issuer can redeem a callable bond according to the schedule. If the interest rates fall, the issuer can buyback bonds. And with revised interest rates, the issuer can issue bonds at lower interest rates to reduce borrowing costs. Callable bonds offer a higher rate of interest than noncallable bonds of equal quality. And callable bonds are repurchased by the issuer at a premium price.

WHAT ARE CAPITAL GAIN BONDS (54EC BONDS)?:

54EC Bonds are Capital Gain Tax Exemption Bonds that provide100% tax exemption on the long term capital gain earned by selling any property. These bonds are the best options to save tax after the property sale. But conditions apply, such as the time gap between property sale and bond investment cannot exceed six months. Also, the investment limit in 54EC Bonds is 50 lakhs.Note: 54 EC Bonds do not provide any exemption on short term capital gains.

WHAT ARE CONVERTIBLE BONDS?

Convertible Bonds are the corporate bonds that bear the provision to be converted into a predetermined number of common stock or equity shares. Like any other Bond, these Bonds pay coupons regularly too. Conversion to common stock happens at a specific time before maturity and usually at investors’ discretion. The issuer also can force conversion to skip the redemption of bonds.By issuing convertible bonds, companies can keep the company’s sale of equity under check and hence control promoter holdings dilution. As these bonds come with an extra feature of convertibility, they come with a lower coupon rate, reducing borrowing costs. If share prices are high, the investors can opt to convert bonds into shares; otherwise, they will continue to receive regular coupon payments.

WHAT ARE SECURED and UNSECURED BONDS?

Secured Bonds are bonds that are collateralized by an issuer’s asset or future cash flows. If the issuer defaults, then bondholders can claim the asset or the cash flow generating source.Read moreUnsecured Bonds don’t come with any collateral. If the issuer defaults, unsecured bondholders can’t claim any of the issuers’ assets. Here investment decision is taken purely on trust on the issuer and credit history of the issuer. All unsecured bonds are not unsafe creditworthiness of the issuer’s matters.Note: During bankruptcy, secured bonds are paid before unsecured bonds.

WHAT ARE SENIOR BONDS AND SUBORDINATE BONDS?

Senior Bonds are the bonds that are considered before other junior bonds in the hierarchy of payment during liquidation. Senior Bonds come with lower risk. Subordinate bonds come with higher returns and relatively higher risk. In the extreme case of liquidation of the Bond Issuing company, “senior bonds” are paid off before “subordinate bonds.

What is Coupon Frequency?

Coupon Frequency refers to how regularly an issuer pays the coupon to holder. Bonds pay interest monthly, quarterly, semi-annually or annually.

What is Coupon / Interest ?

Coupon / Interest is the cash flow that is offered by a particular security at fixed intervals / predefined dates. The coupon expressed as a percentage of the face value of the security gives the coupon rate.