Top 10 REC Bonds

6 min read • Published 24 January 2024
Written by Anshul Gupta

REC Bonds are an important topic in finance, but their exact nature isn’t immediately clear from the name. These bonds are a specific type of investment, holding a unique place in the financial world. They stand out due to their special characteristics and role in the market. 

Understanding REC Bonds means looking into what makes them different from other investments and why they matter to investors. This blog will explore REC bonds, how they work, and our top 10 choices. Without further ado, let’s get into it! 

What are REC Bonds?

REC Bonds are a financial instrument issued by the Rural Electrification Corporation Ltd (REC), a Navratna public sector company under the Ministry of Power, established in 1969. The primary role of REC is to finance and promote rural electrification projects across India. They offer financial support to various segments of the power sector, including generation, transmission, and distribution, mainly through loans to state electricity boards and state government entities.

The company operates from its headquarters in New Delhi and extends its reach through 20 branch offices in different states. This widespread presence helps REC effectively manage and distribute funds for electrification projects in rural areas.

To fund these initiatives, REC raises money from market borrowings, which primarily include issuing bonds with varying maturity periods, along with term loans and foreign borrowings. These REC Bonds are a crucial element of their funding strategy, enabling them to invest in and support rural electrification schemes, thereby significantly enhancing India’s power infrastructure.

Top 10 REC Bonds

To help you make an informed decision, here are the list of the top 10 REC bonds carefully curated for you: 

IssuerCRISIL RatingBond CodeAmount (Cr)Maturity DateInterest Rate
Rural Electrification Corporation Limited – INE020B07IZ5AAAINE020B07IZ5195525 Aug 20249.34 %
Rural Electrification Corporation Limited – INE020B08724AAAINE020B0872410015 Feb 20279.15 %
Rural Electrification Corporation Limited – INE020B08732AAAINE020B0873210015 Feb 20279.15 %
REC Limited – INE020B08BP9AAAINE020B08BP92151.228 Mar 20298.97 %
REC Limited – INE020B08BQ7AAAINE020B08BQ71600.716 Apr 20298.85 %
Rural Electrification Corporation Limited – INE020B08831AAAINE020B08831430012 Apr 20238.82 %
REC Limited – INE020B08BJ2AAAINE020B08BJ2202722 Jan 20298.80 %
REC Limited – INE020B08BS3AAAINE020B08BS3109714 May 20298.80 %
Rural Electrification Corporation Limited – INE020B08443AAAINE020B08443180012 Jul 20258.75 %
Rural Electrification Corporation Limited – INE020B08427AAAINE020B08427125008 Jun 20258.75 %

Who Can and Should invest in REC Bonds?

Individuals, Hindu Undivided Families (HUFs), approved institutions, and Non-Resident Indians (NRIs) are the ideal candidates for investing in REC Bonds, specifically the 54EC Capital Gain Bonds. These bonds are tailored for investors who have accrued long-term capital gains from immovable property. 

To benefit from a tax exemption under section 54EC, these investors should invest in REC bonds within six months of earning the long-term capital gain. This makes REC Bonds a strategic choice for those aiming to mitigate tax liabilities following significant property sales.

Advantages of REC Bonds

  • Investors can claim an exemption on long-term capital gains from the sale of immovable property, but only if they invest in REC Bonds under Section 54EC within six months after the property transfer.
  • These bonds have earned the highest credit ratings from CRISIL and ICRA, indicating strong stability in repaying both principal and interest.
  • The interest from REC bonds is taxable, but there’s no TDS deducted from this interest, which can benefit investors.
  • Backed by the Government of India, REC bonds carry a lower risk, given REC’s status as a public sector entity.

Disadvantages of REC Bonds

  • A significant limitation is that these bonds are non-transferable, making them non-marketable and potentially less attractive for investors seeking liquidity.
  • Premature redemption of the bonds is not allowed under any circumstances other than the death of the bondholder, which could be restrictive for some investors.

How To Invest in REC Bonds?

Access REC’s Website: Visit the official website of Rural Electrification Corporation Limited.

Select Application Process: Choose between online or offline application methods. Click the relevant section for 54EC Capital Gain Tax Exemption bonds online.

Online Application Form:

  • Select ‘Submit Application Form Online’.
  • Click ‘Fill a New Form Online’.
  • Enter required details, including the first holder’s name and PAN number.
  • After completing the form, download and scan the signed form and KYC documents.

Document Upload:

  • Select ‘Upload Application/KYC Documents’.
  • Fill in the details and enter the OTP received.
  • Upload the necessary documents.

Payment Process:

  • Click on ‘Proceed to Payment’.
  • Choose your bank for payment via the provided gateway.
  • Complete the payment process.

Acknowledgement: Receive confirmation and acknowledgement on your registered email ID.

Offline Application:

  • If you choose offline mode, download the application form, fill it out, and attach it with a demand draft or cheque.
  • Submit it to authorised banks.

Application Status Check: Use the website to check the status of your bond application.

Remember, the investment is capped at Rs. 50 lakhs and these bonds have a lock-in period of 5 years and are non-transferable.

Final Word

REC bonds are a type of bond that helps build electrical infrastructure in India. Based on your strategy of diversifying your portfolio, these bonds are a great investment choice. We hope our blog helped you make an informed decision. And as always, happy investing! 

Frequently Asked Questions(FAQ’s)

What is the lock-in period for REC Bonds?

The lock-in period for REC Bonds is 5 years. These bonds are non-transferrable and do not allow for premature exit​​​​.

How can one apply for REC Bonds?

To apply for REC Bonds online, visit the REC’s official website and follow the specified application process. Download and fill out the REC Bonds application form for offline applications and send it with the necessary documents to the provided address​​​​.

Is there a loan facility available against REC Bonds?

The sources did not mention information regarding a loan facility against REC Bonds. Typically, such specifics would be available on the official REC website or by contacting their customer service.

What is the interest rate on REC Bonds?

The interest rate on REC Bonds is approximately 5% per annum, paid annually​​​​.

What are the minimum and maximum investment limits for REC Bonds?

The minimum investment in REC Bonds is ₹10,000 (for 2 bonds), and the maximum investment limit is ₹50,00,000 in a financial year​​​​.

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Anshul Gupta

IIT Roorkee Alumnus and CFA with experience of structuring debt products worth more than 15000Cr for institutional and retail investors.

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