The Telegraph
Since 1st March, 1999
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IDBI lines up new series of flexibonds

New Delhi, Nov. 4: The Industrial Development Bank of India (IDBI) is gearing up to raise more money to pump into the infrastructure sector. According to sources, the development financial institution plans to launch its Flexibonds Series 16 next month.

Last month, IDBI issued tax-saving infrastructure bonds—Flexibonds Series 15—to raise Rs 300 crore with an option to retain over subscription of Rs 300 crore. The issue closed on November 2. IDBI will target an equal amount through the new series of bonds. IDBI plans to raise Rs 1500 crore (with the option to retain over-subscription up to Rs 1500 crore) during the current financial year through flexibonds.

The Securities and Exchange Board of India allows an institution to raise money from the market in one or several tranches but within the stipulated period of 365 days.

One point of worry for IDBI is that, Icra Ltd, the credit rating agency, has lowered the long-term rating on its existing bonds to high safety (LAA) from highest safety (LAAA). Though there is only a marginal difference between these two ratings, analysts say that the downgrade will have an impact on the “feel-good” factor of the investors.

The financial institution also said that it had reduced interest rates on Suvidha Fixed Deposit schemes which will take effect on November 16. The interest rate applicable on a five-year term (under the monthly income option) will be 8.75 per cent down from its earlier 9.5 per cent. For a fixed deposit term of three to five years the reduced interest rate will be 8.25 per cent. However, senior citizens will be eligible for a 50 basis points higher interest rate on all schemes.

Under this scheme, the minimum investment required for monthly and quarterly interests will be Rs 50,000 and Rs 25,000 respectively. For interest payable yearly or on maturity, the minimum investment required is Rs 10,000.

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