10.50% IIFL NCD – Jan’19 – Should you Invest?

India Infoline Finance Limited (IIFL Finance) was incorporated in 2004 under the flagship of IIFL Holdings Limited and presently offers small-ticket loan products to retail borrowers, delivered through a pan India branch network of 1,755 branches and digital channels. It has come out with public issue of non-convertible debentures (NCD) offering up to 10.50% interest rate.

IIFL NCD – Significant Points:

  • Offer Period: January 22 to February 20, 2019
  • Annual Interest Rates for Retail Investors: 9.60% to 10.50% depending on tenure
  • Price of each bond: Rs 1,000
  • Minimum Investment: 10 Bonds (Rs 10,000)
  • Max Investment Limit for Retail Investor: Rs 10 Lakhs
  • Credit Rating: CRISIL AA/Stable, ICRA AA (Stable), Brickwork AA+/Stable
  • NCD Size: Rs 250 crore with option to retain over-subscription upto Rs 1750 crore
  • Allotment: First Come First Serve
  • Listing: Bonds would be listed on BSE & NSE and will entail capital gains tax on exit through secondary market

Also ReadKnow NCD – Investment Tips, TDS and Taxation

IIFL Finance NCD – Investment Options:

There are 6 options of investment in IIFL NCD.

IIFL NCD - January 2019 - Investment Options
IIFL NCD – January 2019 – Investment Options

Also Read: 25 Tax Free Incomes & Investments in India

IIFL NCD – Who can Apply?

This issue is open to all Indian residents, HUFs and Institutions.

  • Category I – QIB Investors – 20% of the issue is reserved
  • Category II – Corporate Investors – 20% of the issue is reserved
  • Category III – HNIs Investors – 30% of the issue is reserved
  • Category IV – Retail Individual Investors including HUFs – 30% of the issue is reserved

NRIs cannot apply for this NCD.

Why you should invest?

  1. AA+ Credit rating means very less likely hood of credit default
  2. Strong brand name and a track record of strong financial performance
  3. The interest rates are 2% higher than your regular Bank FDs
  4. No TDS if invested in Demat Form
  5. Has Call Option – which means IIFL can redeem the bond before maturity as per the call option mentioned.

Also Read: Highest Interest Rate on Recurring Deposits

Why you should not invest?

  1. There are NCDs available in secondary market which have higher yields with similar rating. The problem is low liquidity and hence is difficult to buy in large numbers.
  2. The present Tax Free Bonds are offering yields up to 6.5% in secondary market, which is better investment for People in highest tax bracket.
  3. You can also invest in high rated company fixed deposits

How to Apply?

You can apply online by ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work.

Learn: How to apply for NCD issues using ASBA?

In case you don’t want to do it online, you can download the application form from company site or Financial Institutions and submit to collection centers.

IIFL NCD – January 2019
IIFL NCD – January 2019

Recommendation:

  1. My recommendation is to invest some part of your Fixed Income investment in this NCD Issue
  2. You should always have diversified portfolio be it fixed deposit, NCD or equity investment
  3. Its good idea to remain invested till maturity because liquidity on exchanges are low and hence you would get lower than market value

If you plan to invest in this issue, do it early as most good NCD issues are over-subscribed before the end date.

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