10.6% Indiabulls Consumer Finance NCD – June’19 – Should you Invest?

Indiabulls Consumer Finance Limited has come out with latest NCD (non-convertible debentures) offering up to 10.6% interest rate. The issue opens on May 30 and closes on June 21 , 2019.

Indiabulls Consumer Finance Limited (IBCFL), formerly IVL Finance Limited is a non-deposit taking NBFC registered with the Reserve Bank of India and is a 100% subsidiary of Indiabulls Ventures Limited. 

Indiabulls Consumer Finance NCD – Significant Points

• Offer Period: May 30 to June 21, 2019
• Annual Interest Rates for Retail Investors: 9.95% to 10.6% 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: CARE AA/Stable, Brickwork AA+/Stable
• NCD Size: Rs. 100 Crores with an option to Retain Over-subscription Up to Rs 900 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 Read – Know NCD – Investment Tips, TDS and Taxation

Indiabulls Consumer Finance NCD – Investment Options

There are 9 options of investment in Indiabulls Consumer Finance Ltd NCD.

Click to Know about latest NCD issues

Indiabulls Consumer Finance NCD – Who can Apply?

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

1. Category I – QIB Investors – 20% of the issue is reserved
2. Category II – Corporate Investors – 30% of the issue is reserved
3. Category III – HNIs Investors – 30% of the issue is reserved
4. Category IV – Retail Individual Investors including HUFs – 30% of the issue is reserved

However NRIs cannot apply for this NCD.

Also Read: 25 Tax Free Incomes & Investments in India

Why you should invest in Indiabulls Consumer Finance NCD?

1. AA Credit rating means very less likely hood of credit default
2. The interest rates are 3% higher than your regular Bank FDs
3. No TDS if invested in Demat Form
4. The NCD is secured, which means the above debt is backed by assets of the company
5. The interest rate has started to go down, so a good time to lock in high interest rate.

Why you should not invest in Indiabulls Consumer Finance NCD?

1. There have been issues with some well rated companies like DHFL,
   IL&FS where rating agencies suddenly downgrade the rating. This risk always existed but it has come to forefront in last few months
2. 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.
3. 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.

How to Apply for Indiabulls Consumer Finance NCD?

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.

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