Nabard to issue zero coupon bond

Mumbai, Dec 29 | Updated: Dec 30 2006, 05:30am hrs
The Centre has permitted National Bank for Agriculture and Rural Development (Nabard) to issue zero coupon bonds to the tune of Rs 10,000 crore.

The resources raised through these bonds would be channelised for priority areas in agriculture and rural development, a Nabard release said.

It said the bonds would be issued at discount and repaid at face value. The face value per bond will be Rs 20,000.

The tenure of these bonds will be 10 years. However, investors will have the option to sell it in the secondary market.

The bonds will be listed in Bombay Stock Exchange (BSE), making it a liquid investment.

The income accrued on the bonds-the difference between the maturity value and the amount of investment-will be treated as a capital gain and be taxed accordingly.

No tax will be deducted at source. The long-term maturity will allow the investor to plan for long-range goals, such as paying for children's education/ marriage or post retirement requirements.

The bonds would be available for subscription at all the offices of Nabard and selected bank branches.