Start earning 9-11% fixed returns with bonds that are carefully curated.
REC Bonds, as those bonds that are issued by the Rural Electrification Corporation (REC) Limited. They are secured, rated, unlisted, non- convertible, non-cumulative, redeemable, taxable bonds. They are similar to debentures issued for cash at par with benefits under Section 54EC of the Income Tax Act of 1961.
Name | Issue Size | Maturity | Coupon |
---|---|---|---|
Rural Electrification Corporation Limited | 1955.00Cr | 25 Aug 2024 | 9.34 % |
Rural Electrification Corporation Limited | 100.00Cr | 15 Feb 2027 | 9.15 % |
Rural Electrification Corporation Limited | 100.00Cr | 15 Feb 2027 | 9.15 % |
REC Limited | 2151.20Cr | 28 Mar 2029 | 8.97 % |
REC Limited | 1600.70Cr | 16 Apr 2029 | 8.85 % |
REC Limited | 1097.00Cr | 14 May 2029 | 8.80 % |
REC Limited | 2027.00Cr | 22 Jan 2029 | 8.80 % |
Rural Electrification Corporation Limited | 1250.00Cr | 08 Jun 2025 | 8.75 % |
Rural Electrification Corporation Limited | 1800.00Cr | 12 Jul 2025 | 8.75 % |
Rural Electrification Corporation Limited | 1171.48Cr | 24 Sep 2028 | 8.71 % |
REC Bonds are issued by REC Limited, a Public Sector Undertaking (PSU) under the Ministry of Power. It is one of India's leading infrastructure finance companies, with a net worth of ₹58,121 crores (as of March 31, 2022). The main objective of REC is to finance and promote rural electrification, transmission, distribution and generation, including renewable energy projects all over India. It provides financial assistance to State Electricity Boards, State Government Departments, central/state power utilities, independent power producers, rural electric cooperatives, and private sector utilities through its extensive nationwide network of 22 state offices.
REC bonds are section 54EC bonds for investors earning long-term capital gains from selling their immovable property or shares. An investor can claim tax exemption under section 54EC of the Income Tax Act of 1961.
Money to be invested
Only long-term capital gains arising from the transfer of long-term capital assets being immovable property within 6 months of the transfer can be invested in these Bonds.
Rate of interest
REC bonds provide an interest of 5.25% per annum as on April 1, 2023, which will be paid every year on June 30 until redemption, and the company will pay the balance interest along with redemption.
Minimum investment
An investor needs to make a minimum investment of ₹10,000. This means they have to buy at least one bond.
Maximum investment
An investor can buy a maximum of 500 bonds of ₹10,000 each, i.e., in a financial year, they invest up to ₹50 lakhs
Listing in the stock exchange
REC Bonds are non-transferable and cannot be listed on any stock exchange.
Credit rating
REC Bonds have received an “AAA” credit rating from CRISIL and ICRA Limited.
Tenure
An investor needs to hold the investment in REC bond for at least five years from the deemed date of allotment to avail of the benefit under Section 54EC of the Income Tax Act of 1961.
Transferability
REC bonds are non-transferable and non-negotiable.
Refund/withdrawal of application money
Once credited to the REC 54EC Collection Account, the amount can’t be refunded. However, in case of rejection of the Application on account of technical grounds, at REC’s sole discretion, a refund without interest will be made.
Record date
The record date of interest shall be 15 days before each coupon payment date and 15 days before the redemption date. The company will pay the interest to the person whose name appears in the Register of Bondholders on the record date.
Bond yield refers to the returns an investor will earn on investing in a particular bond, and the calculation involves two variables: annual coupon payment and current bond price.
Here is the bond yield formula:
As REC bonds are not marketable, the yield of the bond is equal to the annual coupon rate.
For instance, for a REC bond with a face value of ₹10,000 and an annual coupon of 5.25%, the annual coupon payment would be ₹525 (). The bond yield would be 5.25% ().