Muthoottu Mini Financiers Ltd has come out with public issue of non-convertible debentures (NCD) – Muthoottu Mini NCD offering up to 10.25% interest rate and opens for subscription from March 30, 2021.
Muthoottu Mini Financiers Limited, is NBFC based out of Kerala dealing in Gold Loans. It has main presence in southern states with some branches in Delhi, Haryana etc. This is different from Muthoot Finance, (different spelling and logo) which is the biggest player in Gold Loan.
Muthoottu Mini NCD – Significant Points:
- Offer Period: March 30 to April 23, 2021
- Annual Interest Rates for Retail Investors: 9.00% to 10.25% 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: IND BBB by India Ratings
- Allotment: First Come First Serve
- Listing: Bonds would be listed on BSE and will entail capital gains tax on exit through secondary market
Muthoottu Mini NCD – Investment Options:
There are 7 options of investment in Muthoottu Mini NCD.
Learn All about NCDs
NCDs or non-convertible debentures or more popularly known as Bonds are a bit complex investment products. You must understand the product, risk involved, the taxation on interest received and when you sale it. We have done a separate post regarding this titled – Know all about NCDs.
Also you can keep track of upcoming NCD issues here.
Muthoottu Mini NCD – Who can Apply?
This issue is open to all Indian residents, HUFs and Institutions.
- Category I – Institutional Investors – 10% of the issue is reserved
- Category II – Non-Institutional Investors, Corporates – 10% of the issue is reserved
- Category III – HNIs – 40% of the issue is reserved
- Category IV – Retail Individual Investors – 40% of the issue is reserved
However NRIs cannot apply for this NCD.
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Muthoottu Mini NCD Review
Why you should invest in Muthoottu Mini NCD?
- The NCD is secured, which means the above debt is backed by assets of the company
- The interest rates are 2% – 3% higher than your regular Bank FDs
- No TDS if invested in Demat Form
Why you should not invest in Muthoottu Mini NCD?
- The issue has BBB rating – which means retail investors should stay away as it has high risk of default.
- You can invest in Edelweiss Financial Services Ltd NCD offering up to 9.25% and has AA rating.
How to Apply for Muthoottu Mini 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.
How to apply for NCD through ASBA?
If you want to apply to NCDs, ASBA is the best way to do so. It’s easy, secure and the money leaves the account only when the bonds are allocated. We have covered step by step process for ASBA in SBI in the post. You have ASBA facility in most big banks.
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:
- My recommendation is DO NOT Invest in Muthoottu Mini NCD due to BBB credit rating.
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Muthoottu Mini NCD FAQs
✅ How to apply for Muthoottu Mini NCD?
You can apply online by ASBA facility provided by most banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work. 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.
✅ Is Muthoottu Mini NCD Secure?
Option 1 to 5 of Muthoottu Mini NCD is secured by its assets and future income. However option 6 & 7 are unsecured.
✅ What is tax on Muthoottu Mini NCD?
For Tax Purpose NCDs are treated similar to Fixed Deposits. The interest earned is added to your income as “income from other sources” and taxed accordingly.
In case the NCD is sold before maturity on stock exchanges, it would lead to Capital Gains and taxed according to the holding period.
-If the NCD was sold within 12 months of allotment, it leads to Short Term Capital Gains and
-if the selling period is more than 12 months its Long Term Capital Gains
-Short Term Capital Gains would be added to income and taxed accordingly
-Long term capital Gains would be taxed at the flat rate of 10% (u/s 112 of IT Act)
✅ Is Muthoottu Mini NCD safe to invest?
The credit rating for Muthoottu Mini NCD is BBB. This is a low rating and hence our recommendation is to stay away from this.