State Bank of India has always been one of the most successful and approved bank to offer all kind of bonds. It offers different rates for everyone including a retailer as well as a non-retailer. In this case, the investors get a chance to make gains; as such bonds are listed at a fixed premium rate for a specified period. It is observed that, SBI has been consistent in providing good returns on the bonds even though the listing of the bonds depends upon the demand by the public.
On Monday, 7th February 2011, State Bank of India declared an interest rate of up to 9.95% for a period of 15-year bonds. The specifications say that any non-retail investor that include people who invest in bulk like high institutions, will get 9.3% for 10 years and 9.45% for 15-year investments. SBI had draft a prospectus with securities and exchange board in the earlier months of the year, they finally approved State Banks request to sell bonds worth of Rs 1000 crore by raising funds, and they are even given the option to oversubscribe the amount to Rs 1000 crore. Wile considering the retail investors, SBI can retain the over subscription to more than 2000 crore up to Rs 10000 crore. The opening date is 21st February 2011 and closing date is 28th February.
There are certain differences while investing in SBI bonds, and they fall as an advantage on the investor’s part. The subscribing is very easy for SBI bonds; you just need a Demat account to invest in these bonds as the funds are held in dematerialized form. These bonds are different from other Infra bonds launched in 2011. This SBI Bond is not covered under section 80 CCF, so the investors does not benefit the additional Rs.20,000/- Income tax rebate.
Normally, the interest is taken as the income and its gets added to your income and you pay tax accordingly.
These bonds will help long-term investments and the investor is guaranteed liquidity in these bonds. This on going plan will help in development of the long term investments plans. SBI offers all types of long term loans including home loans, or loan taken for redevelopment or infrastructure management. The bonds get listed in NSE; hence it will be easier to trade. They will also provide flexibility so that you can either sell the bonds on maturity or exchange them in the market. Hence, these bonds will enable the bank to match its fixed liabilities.