New Delhi, Sept 24: The Industrial Development Bank of India (IDBI) today said it will reduce the rate of interest on the Suvidha Fixed Deposit scheme with effect from October 1.
Currently, the scheme offers a 10 per cent rate of interest on a five-year maturity term for senior citizens and trusts. For individuals, the rate of interest offered is 9.5 per cent for the same period.
Under the scheme, minimum investment required for interest payable monthly or quarterly is Rs 50,000 and Rs 25,000 respectively. For interest payable yearly or on maturity, the minimum investment required is Rs 10,000, sources said.
Recently, IDBI has said that it will issue tax-saving infrastructure bonds at a lucrative rate of interest to fund the infrastructure sector.
“We have obtained approval from the government to raise Rs 1,500 crore with options to retain over-subscription up to Rs 1,500 crore,” he said.
He said the Securities and Exchange Board of India (Sebi) is expected to give its go-ahead to the proposal this week. In such a scenario, the bonds will hit the market in the first week of October, he added. The bonds will carry a tax-rebate under Section 88 of the Income Tax Act.
Sources say IDBI will issue around a dozen schemes in the current fiscal (2002-03) to raise funds. Of these, the Regular Income Bond, IDBI Growing Interest Bond, IDBI Retirement Bond and IDBI Encashment Bond will hit the market before the end of 2002.
This is the first tax-saving bond to be issued by a financial institution in 2002-03. Earlier, Rural Electrification Corporation (REC) had issued tax-savings bonds at 8 per cent rate of interest for a five-year term. The bond got an AAA rating from Crisil.
Earlier this month, the government said that tax-free bonds, exempted from income and wealth tax, will be issued from October 1. The bonds will carry a 7 per cent rate of interest and have a maturity of six years.
The difference between tax-savings bonds and tax-free bonds are that while investments in tax-savings bonds are meant to gain a rebate in income tax, as far as tax-free bonds are concerned, only the interest accumulated is non-taxable.
In 2001-02, IDBI had raised Rs 8,405 crore from the domestic market via bond issues and fixed deposit programmes. Of these, Rs 3,616 crore came through issue of certificate of deposits, term money bonds, IDBI corporate deposit and commercial paper, Rs 3,560 crore through private placement of “Omni-Bonds” and the rest through fixed deposit schemes and Flexi bonds.