A bond, which is a part of fixed income investments, is just an organization's IOU; i.e., a promise to repay a sum of money at a certain interest rate and over a certain period of time.

The time period for which the bond is issued is called the tenure. The tenure of the bond varies from 1 year to 99 years.

Compounding refers to the interest being determined on the principal periodically, for eg semi - annually. This would be carried out twice incase of half-yearly compounding. As an example, a bond of face value Rs. 100, interest being 10% compounded semi annually, the interest receivable at the end of six months would be Rs. 5 and that at the end of one year would be another Rs. 5. In case of compounding greater than once a year, the yield to the investor on his investment will always be greater than the coupon on the bonds (provided that the bond was bought at par).

Yes, the bond can be purchased by paying cash at the designated branches of the collecting banks but it is always advised to pay through cheques or Demand Draft Q. Is the PAN mandatory for purchasing a bond? The issuer, in the application form does ask for the PAN No. and it is mandatory if the amount invested is greater then 50000.

At the time of the maturity, you can send the bond certificate signed by all the bondholders back to the issuer or registrar. The authority sends a DD or a cheque payable at par in the name of bond Holder(s).

Yes, now the issuers have started the facility in which the investor can redeem his bond whenever he needs money. Another alternative in the case of listed bonds, is to sell the bonds in the secondary market, that is, the stock exchanges.

Yes, you can have joint holders while subscribing to the bond but for all the communication and redemption, the signatures of all the bondholders are required.

In this facility any one of the accountholder (if it is in a joint name) can stake a claim to the money deposited and operate the account without the signature of the other account holders. Otherwise also it does not present a problem if one of the bondholder has expired without any nomination.

In this both bondholders have to be present at the time of withdrawal of deposits and their signatures have to be present on the Bond and on the death of an bondholder it becomes very cumbersome process to withdraw the money as you are supposed to furnish the death certificate of the expired account holder.

Bondholders get the redemption amount in the form of a Demand Draft or cheque payable at par in the name of the bondholder(s)

Nomination is a facility in which the bondholder nominate a person who will get the proceeds of his bond if he dies.

Yes, the issuers has all the right to reject any application for subscription of the bond

You just have to write an application informing of any change signed by all the bond holders and send it to the authority designated by the issuer which is generally written n the bond certificate.

The Infrastructure bonds are eligible for tax rebate u/s88 of the income Tax Act. They are eligible for rebate of 20 percent on the invested amount subject to the max tax rebate of 16000. Besides in other types of bonds investor get the Tax deductions on the interest earned u/s 80L

Yes the issuers deduct TDS on the income from Bonds if the cumulative interest is greater than 2500 in a financial year.

Yes, it is mandatory for the issuer to club the interest income for the TDS purposes.

Yes, for the retail investor, the companies like ICICI etc fix the ceiling that a person can not invest more than 1 crore but in private placement to the institutions there is no limit.

You should immediately inform the issuer and send the application signed by the Bondholders alongwith the indemnity Bond, FIR for the issue of Duplicate certificate.

Yes the Principal can invest the money on behalf of the minors.

The deemed date of allotment or the allotment date, which is the date from which the instrument comes into existence, is the start date for interest calculation.

The payment in that case will be made on the next day.

It is given in the Bond form. It is usually in the region's court where the company is registered.

• An individual
• in his or her name or on behalf of a minor, or
• jointly with one or more individuals
• a Hindu Undivided Family
• a Non-Resident Indian (without the right of repatriation of principal)
• Government Promissory Notes can also be issued on anyone or survivor basis
• Bonds can be held by a minor with one or more major individual/s (including a minor)

There is no maximum limit for investment in the bonds. Application must be in multiples of Rs.1000/- subject to a minimum of Rs.1000/-.

The bonds will be issued at par. The bonds will be issued for a minimum amount of Rs.1,000/- (face value) and in multiples thereof. Accordingly, the issue price will be Rs. 1,000/- for every 1 bond.

The date of issue of the bonds in the form of Promissory Note/Bond Ledger Account will be the date of receipt of subscription in cash or the date of tender of draft or the date of realisation of the cheque as the case may be.

The period of holding of bonds is five years from the date of issue. The bonds shall be repayable on the expiration of 5 years from the date of their issue.

Premature encashment of the Bonds is not allowed. The Bonds will earn interest upto the date of redemption, if not redeemed on due date.Proceeds can be reinvested. The matured bonds in the form of Promissory Note/existing Stock Certificate will be tendered for reinvestment at Public Debt Offices of Reserve Bank of India only.

• The bonds will be issued and held at the credit of the holder in an account called bond ledger account or in the form of promissory note
• The bonds in the form of bond ledger account, will be issued and held with the public debt offices of the Reserve Bank of India or any branch of a scheduled bank authorized by Reserve Bank of India
• The bonds in the form of promissory note will be issued only at the offices of Reserve Bank of India
• Where the bonds in the form of promissory note cannot be issued immediately on receipt of the subscription due to non-availability of the bond forms, or otherwise the receiving office will issue a provisional receipt in favour of the subscriber for the value of the subscription tendered by him
• The bonds issued in one form will not be eligible for conversion into the other form
• the bonds issued under 9% Relief Bonds 1993, 10% Relief Bonds 1995 and the existing 9% Relief Bonds 1999 which are not matured will be eligible for conversion into the bonds in the form of bond ledger account under this scheme for the remaining tenure of the relative bonds