Frequently Asked Questions on Infrastructure Bonds
What is the Issue Structure?
Public Issue By Infrastructure Development Finance Company Limited (“Company” Or
“Issuer”or “IDFC”) Of Long Term Infrastructure Bonds Of Face Value Of Rs. 5,000
Each, In The Nature Of Secured, Redeemable, Non-Convertible Debentures, Having
Benefits Under Section 80ccf Of The Income Tax Act, 1961 (The “Bonds”), Not
Exceeding Rs. 50,000.0 Million For The Financial Year 2011 – 2012 (The “Shelf Limit”).
The Bonds Will Be Issued In One Or More Tranches Subject To The Shelf Limit For The
Financial Year 2011-2012 .
What is the Issue Time Table ?
Issue Opening Date
November 21,2011
Issue Closing Date
December 16, 2011
The Issue shall remain open for subscription
during banking hours for the period indicated
above, except that the Issue may close on such
earlier date or extended date as may be decided by
the Board subject to necessary approvals. In the
event of an early closure or extension of the Issue,
the Company shall ensure that notice of the same
is provided to the prospective investors through
newspaper advertisements on or before such
earlier or extended date of Issue closure
Deemed Date of Allotment
The Deemed Date of Allotment shall be the date
as may be determined by the Board of the
Company and notified to the Stock Exchanges.
The actual allotment may occur on a date other
than the Deemed Date of Allotment.
Who are the eligible investors?
Indian nationals resident in India, who are not minors, in single or joint names (not more
than three) and Hindu Undivided Families or HUFs,
What are the brief term of the NCDs?
Face Value (Rs.)
Tranche 1 Bond
per 5,000
Issue Price (Rs.)
Tranche 1 Bond
per 5,000
Minimum Application
Two Tranche 1 Bonds and in multiples of one Tranche 1 Bond
thereafter.
For the purpose fulfilling the requirement of minimum subscription
of two Tranche 1 Bonds, an Applicant may choose to apply for two
Tranche 1 Bonds of the same series or two Tranche 1 Bonds across
different series.
Rating
“(ICRA)AAA” from ICRA and “Fitch AAA(ind)” from Fitch
Security
First pari passu floating charge over the Secured Assets and first
fixed pari passu charge over specified immovable properties of the
Company more particularly as detailed in the section entitled
“Terms of Issue -Security” on page 117.
Security Cover
1.0 time the outstanding Tranche 1 Bonds at any point of time.
Listing
NSE and BSE
Debenture Trustee
IDBI Trusteeship Services Limited
Depositories
National Securities Depository Limited and Central Depository
Services (India) Limited
Registrar
Karvy Computershare Private Limited
Mode of Payment
Electronic Clearing Services
At par cheques
Demand drafts
Issuance
Dematerialized form or Physical form* as specified by an
Applicant in the Application Form.
Lock-in Period
5 years from the Deemed Date of Allotment
Trading
Dematerialized form only following expiry of the Lock-in Period
Maturity Date
10 years from the Deemed Date of Allotment
Buyback Date
Date falling 5 years and one day from the Deemed Date of
Allotment
Put/Call Option
None
Day Count Convention
Interest shall be computed on a 365 days-a-year basis on the
principal outstanding on the Bonds. However, where the interest
period (start date to end date) includes February 29, interest shall
be computed on 366 days-a-year basis, on the principal outstanding
on the Bonds
What are the specific terms for the each series of NCDs
Series
1
2
Frequency
of
Interest payment
Annual
Cumulative
Face Value per
Tranche 1 Bond
Rs. 5,000
Rs. 5,000
Buyback Facility
Yes
Yes
Buyback Amount Rs. 5,000 per Tranche 1 Bond
Rs. 7,695 per Tranche 1 Bond.
Buyback
The period beginning not before
Intimation Period nine months prior to the Buyback
Date and ending not later than six
months prior to the Buyback Date
The period beginning not before nine
months prior to the Buyback Date and
ending not later than six months prior
to the Buyback Date
Tenor
Interest Rate
120 months from the Deemed Date 120 months from the Deemed Date of
of Allotment
Allotment
9% p.a.
N.A.
Maturity Amount Rs. 5,000 per Tranche 1 Bond
Rs. 11,840 per Tranche 1 Bond
Yield on Maturity
9%
9% compounded annually
Yield on Buyback
9%
9% compounded annually
What is the Tax Treatment of interest on these Bonds?
The interest received on these bonds shall be treated as income from any other source and
shall form part of the total income of the assessee in that financial year in which they are
received.
Can a Minor apply for subscription to these bonds?
A minor is not eligible to apply for subscription to these bonds.
Are these infrastructure bonds Tax Free?
No, the interest received in these bonds is not tax free. The investor is liable to pay tax on
the interest received.
The investment up to Rs. 20,000 made will be eligible for tax benefits in the year of
investment under Section 80 CCF of the Income Tax Act, 1961.
Will TDS be deducted on these bonds?
No TDS shall be deducted on interest with respect to bonds issued in Demat mode. TDS
will apply with respect to bonds issued to investors in physical form.
I don't have Demat Account. Can I apply?
Yes, Investors who do not have any Demat Account can apply for the bonds in physical
form. Additional requirements for applying in physical form are given in the Annexure.
Pls note In terms of Regulation 4(2)(d) of the SEBI Debt Regulations, the Company will
make public issue of the Tranche 1 Bonds in the dematerialised form. However, in terms
of Section 8 (1) of the Depositories Act, the Company, at the request of the Applicants
who wish to hold the Tranche 1 Bonds in physical form, will fulfill such request
I only have a joint De-mat account. Can I apply in my own name only?
The name of applicant shall be same as the holders of Demat account. In case of single
applicant the demat account shall also be held in the name of the same single applicant.
Can I apply in joint names?
Yes application can be made in joint names with a maximum of three applicants,
however the demat account shall also be held in the joint names and order of applicant
shall be the same as appearing in the demat account. In case of application made in joint
names, the tax benefit shall only be availed by the first applicant.
What is the maximum amount for which the benefit u/s 80CCF be availed?
Maximum benefit to investor shall be Rs. 20,000/-- under section 80CCF of the Income
Tax Act, 1961
What would happen if I apply amount more than Rs. 20,000?
The allotment shall be made for the sum applied, however the benefit under section
80CCF may only be availed for a maximum sum of Rs. 20,000
Can I invest in both the options?
Yes an applicant may subscribe in both the options . For the purpose of fulfilling the
requirement of minimum subscription of two Tranche 1 Bonds, an Applicant may choose
to apply for two Tranche 1 Bonds of the same series or two Tranche 1 Bonds across
different series
What is the benefit of investing in Tax Saving Infrastructure Bonds if they offer the same
tax benefit?
The Tax exemption benefit under Sec 80CCF on a sum of Rs. 20,000/- is over and above
Rs.1,00,000/- benefit under section 80C, 80CCC and 80CCD.
What is the tenure & lock-in period of these Infrastructure Bonds?
The Tenure of bonds under both the series shall be 10 years and bonds shall be locked-in
of 5 years
Who can offer these Long Term Infrastructure Bonds?
The entities like LlC, IDFC, IFCI and other NBFCs which are classified as Infrastructure
Finance Companies by RBI shall be allowed to issue these long term infrastructure bonds.
I Don't have a PAN card. Can I still apply for subscription?
PAN card is mandatory for subscribing to these bonds.
How will I get my interest on the due date?
The interest shall be credited to the respective Bank account registered with the Demat
account (and for the bond held in physical form in the bank account indicated in
cancelled cheque attached with the form as mentioned in Annexure I through ECS on the
due date for interest payment, and if the due date is a public holiday then the next
working date.
What is the interest on Application Money & Interest on refund ?
The Company shall not pay any interest on application money and interest on refund of
Application Amount, in whole or part.
Can I get loan on these bonds?
You cannot avail of any loan by pledging these bonds in the first 5 years. Thereafter,
these bonds may be pledged to avail loan
Where shall I submit the application forms?
All Application Forms duly completed together with cheque/demand draft for the amount
payable on application must be delivered before the closing of the subscription list to any
of the Bankers to the Issue or collection centre(s)/ agent(s) as may be specified before the
closure of the Issue.
Who shall pay the interest and repay the Principal amount?
IDFC shall pay the interest on these bonds and also the principle amount to the Investor
upon maturity of the bonds or at the time of buy back. The bonds are credit rated as
“ AAA” by Fitch & ICRA with stable outlook indicating safety of highest order
Who would get the interest in case of the joint application?
In case of joint application the interest shall be paid to the account of the first applicant
only.
Is it ok to submit photocopy of all the 3 documents mentioned in the Annexure?
As long as the documents are self attested, the photocopy all these documents can be
submitted with the application form.
Mode of Holding can be Either or Survivor?
When the bonds are held in joint names and one of the joint holders dies, the survivor(s)
will be recognized as the Bondholder(s)
Will there be TDS in Physical Form? (As per the General Instruction 12, to Avail TDS
investor can submit 15G/15H)?
In case the bonds are held in physical form, no TDS is applicable as long as the interest
received does not exceed Rs. 2500 per year. However such interest is taxable income in
the hands of resident bondholder. If the interest exceeds Rs. 2500, to ensure nondeduction of tax as source the bondholder are required to furnish either (a) declaration [in
duplicate] in the prescribed form i.e Form 15G. In case of Senior citizens it should be
15H.
Nomination process in case opted for physical?
IDFC would provide the investors holding the bonds in physical form, nomination
facility at the time of sending the bond certificates
Is it necessary to provide the identity and address proof in case of second and third holders?
The address and identity proof must be provided for all the joint holders of the bonds.
The cheque details would be required only for the account in which the payments need to
be credited.
Who are the collecting bankers to the issue?
HDFC Bank ,ICICI Bank,IDBI Bank Limited, Axis Bank, IndusInd Bank,Dhanlaxmi
Bank ING Vysya Bank and Kotak Mahindra Bank
In whose favour the cheque is to be made?
Cheques has to be made in the favour of “IDFC Infra Bonds – Tranche 1”
Can Intercity clearing cheques acceptable?
No, cheques has to be payable at par or local clearing cheques are only allowed.
Can I accept NRI application?
Non-resident investors including NRIs, FIIs and OCBs are not eligible to participate in
the Issue.
Will the NCDs be traded on the exchange?
NCDs will be listed on BSE & NSE for trading. Trading will commence post completion
of the lock in period
Under cumulative option, when will I get the interest amount?
Under cumulative option, Interest will be paid at the end of 5 years if buyback option is
exercised or at the time of maturity
Annexure I – Additional requirements in case an applicant is not having a Demat Account
Applicant who wishes to subscribe to the Bonds in physical form shall undertake the following
steps:

Don’t fill up the demat details in the application form

Compulsorily provide the following three document with the application form
1. Self-attested copy of the PAN card;
2. Self-attested copy of the proof of residence. Any of the following documents
shall be considered as a verifiable proof of residence:
3. ration card issued by the Government of India; or
4. valid driving license issued by any transport authority of the Republic of India; or
5. electricity bill (not older than 3 months); or
6. landline telephone bill (not older than 3 months); or
7. valid passport issued by the Government of India; or
8. Voter’s Identity Card issued by the Government of India; or
9. passbook or latest bank statement issued by a bank operating in India; or
10. leave and license agreement or agreement for sale or rent agreement or flat
maintenance bill; or
11. letter from a recognized public authority or public servant verifying the identity
and residence of the Applicant.
12. Self-attested copy of a cancelled cheque of the bank account to which the
amounts pertaining to payment of refunds, interest and redemption, as applicable,
should be credited.