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Home » Information » FD's & Bonds
  • Fixed Deposit
  • Bonds
What is Fixed Deposit?
Features
What is a Bank Fixed Deposit?
A fixed deposit or term deposits is an saving option offered by banks wherein a depositor can invest their money for a fixed tenure & rate. The rate of interests depends on the duration of the deposits & the banks.
Features
  • Depositor can earn interest on surplus funds available in the account
  • Encourages saving habit
  • Only one fixed deposit account can be opened at a time. The depositor can open multiple accounts for other such deposits
  • The deposit can be renewed or withdrawn up on maturity
  • As per traditional scheme, the interest earned on FDs gets credited to the depositor’s account either on monthly or quarterly basis, as opted by the account holder
  • Premature withdrawals are not permitted but in case of emergency, banks allow closure of FD accounts. The deduction charges will be levied (percentage of charges may vary from bank to bank)
Non-convertible debentures
Features
Bonds
Features
Types of Bonds
Non-convertible debentures
Non-Convertible Debentures or NCD cannot be converted into equity shares & hence offer investors higher interest rates. NCDS can further be classified as Secured & Un-Secured.

Secured NCDs are backed by the organization or the issuer company’s assets to fulfill debt obligation. Moreover, NCDs may also feature Put Or Call Options. In simple terms, if the NCDs are issued under “Call Options” (Callable Bonds) then they can be redeemed by the issuer before the maturity. The issuer can can call back bonds if they are issued in a high rate environment & the rates fall subsequently. Whereas in a bond issued under “Put Option” , the investor can sell the bond to the issuer at a specified price before its maturity, if the interest rates go up after the issuance of the bonds.
Features
  • NCDs offer high returns & low risk options. The interest rate & rate of return are subject to market conditions
  • As per section 193 of Income Tax Act, there will be no tax levied on securities issued by companies if they are in a demat form & listed on a stock exchange. However, they are taxable if held in physical form
  • NCDs are rated by agencies like FITCH, CRISIL & ICRA
  • They are offered in four options: monthly, quarterly, annual & cumulative interest
Bonds
Bonds are basically a way for companies & governments for issuing capital for expansion, infrastructural projects, etc. By issuing bonds to the public, the organizations & Government can raise money for their projects. In simple terms bonds are like a loan for which you are the lender. The organization who sells the bonds is known as issuer & the holder is called as an investor. The bonds usually have a defined term or maturity, upon which the bonds can be redeemed.
Features
Diversification:

Investment in fixed income securities counterbalances high-risk investments in a portfolio and serves to even out returns in times of volatility.

Fixed returns:
They offer a potentially attractive and regular income avenue as the rate of interest is fixed (in most cases but not all) till maturity.

YTM (Yield to Maturity):
By investing in bonds and holding them till redemption, you can earn maximum returns in the form of regular interest plus the face value amount on maturity.

Protect from volatility:
While fixed income securities generally do not offer the high returns potential of other investments, you are spared from the volatility common in other markets as its price fluctuation is relatively lesser than equity stocks.

Liquidity:
Fixed income securities provide the flexibility and liquidity required to construct a portfolio customized to your specific investment objective. If required, low-risk fixed income instruments like government bonds can be sold at short notice.

Lower Risk:
Fixed income securities represent a loan from investors. As these investors are creditors to the company, in the eventuality of the company being winded down, they have priority over shareholders.
Here is a list of top tax free government and private bonds running in the market. Each of them gives information about coupon rate, last traded price, etc.

Tax Free Bonds:

The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of I.T. Act, 1961. These bonds are generally issued by Government Backed entities and thus have very low default risk.

Other General Features are:

  • These bonds can be applied in Physical or Dematerialized mode
  • These bonds generally come with long tenures of 10, 15 and/or 20 years, however, these bonds can be traded on the listed exchange if applied in demat mode
  • There is no Cap on investment made in these bonds
  • Retail Individual Investors get higher interest rates, so for an Individual, HUF to be eligible for higher rates the maximum investment amount is Rs.10 Lakhs
  • The interest offered is benchmarked to the Government security of similar maturity, subject to conditions laid down by CBDT.
  • These bonds however, do not provide any additional tax benefits

Capital Gain Bonds (54EC Bonds):

According to section 54EC, any person (individuals, HUFs, partnership firms, companies etc.) can avail exemption in respect of long-term capital gains (arising from the sale of long term capital asset other than equity shares and securities), if the capital gain is invested in Capital Gain bonds. The exemption will be the amount of capital gain or the amount of investment made, whichever is less. Interest rate offered on these bonds is 6% per annum. The exemption is subject to:

  • The investment is made within a period of 6 months from the date of transfer of the asset
  • Lock-in-period of 5 years
  • Bonds sold, transferred or converted into money or any loan or advance taken on security of such bond within a period of 3 years from the date of acquisition, the capital gains earlier exempt are taxable in the year of sale or transfer of the bonds
  • Maximum investment limit of up to Rs. 50 Lakhs in a Financial Year per individual.
  • If the amount invested in bonds is less than the capital gains realized, only proportionate capital gains would be exempt from tax.

Government Bonds:

These bonds are offered by the Government of India at a fixed rate. As these are issued & backed by the Government, they are very safe. Interest is taxable in the hands of the investor & it has a lock in period of 6 years.

Features:

  • There isn't any ceiling on these bonds & are open for investments by individuals, charitable investments & universities
  • These bonds come with a lock in period of 6 years & carry an 8% interest per annum
  • The interest on cumulative bonds are paid off at maturity, compounded with the half yearly rates
  • The interest on non-cumulative are paid at half yearly intervals

Corporate Bonds:

These bonds are issued by organizations in private or public sector. These are issued with the objective of borrowing funds from the market to finance their operations/growth. Generally issued for period ranging from 1 year to 20 years, these type of bonds offer income in form of regular interest.

Features:

  • The principal amount invested is safe & regular income in form of interest
  • High rate of interest offered
  • Through issue of such bonds, long term capital needs of the corporate sector can be met
  • If the bonds are listed, then liquidity along with capital appreciation is on the offer

Zero Coupon Bonds :

These types of bonds are sold at the fraction of their Face Value & offers no monthly or periodic interest payments to the investor/holder. These bonds are offered at a discount on the Face Value & on maturity, the investors get the Face Value back. Thus, the difference between the two is the profit earned.

Features:

  • They are offered at a fixed interest rate
  • These bonds appreciate gradually & the earnings accumulate until maturity

Junk Bonds :

Also, known as high-yield bond, they are issued by organizations that are not financially stable & are considered below investment grade. Being a risky trade for the investor, the issuer offers high rate of returns upon maturity to compensate the additional risk.

Features:

  • High rate of returns but suitable for investors with appetite for high risk
  • Can boost overall returns in your portfolio while avoiding higher volatility of stocks
Disclaimer of Warranties
You expressly agree the use of the service is at your sole risk. The service is provided on an "as is" and "as available" basis. www.rkshetty.com expressly disclams all warranties of any kind, whether express or implied, including, but not limited to the implied warranties of merchantability, fitness for a particular purpose and non-infringement . www.rkshetty.com makes no warranty the services will meet your requirements, or the services will be uninterrupted, timely, secure, or error free. Nor does www.rkshetty.com make any warranty as to the results that may be obtained through the service or that defects in the software will be corrected. You understand and agree any material and/ or data downloaded or otherwise obtained through the use of the service is done at your own discretion and risk and you will be solely responsible for any damage to your computer systems or loss of data that results from the download of such material and/ or data. www.rkshetty.com makes no warranty regarding any goods or services purchased or obtained through the service or any transactions entered into through the service. No advice or information, whether oral or written, which you obtain from www.rkshetty.com or through the service shall create any warranty not expressly made herein. You acknowledge that www.rkshetty.com site may contain links to other web sites operated by third parties ("linked sites"). You acknowledge that, when you click on a link to visit a linked site, a frame may appear that contains the www.rkshetty.com logo, advertisements and/ or other content selected by www.rkshetty.com. You acknowledge that www.rkshetty.com and its sponsors neither endorse nor are affiliated with the linked site or any link contained in a link site, or any changes or updates to such sites. You also acknowledge that www.rkshetty.com is providing these links to you only as a convenience. www.rkshetty.com does not endorse in anyway any advertisers/ contents of advertisers on its webpages. Please therefore verify the veracity of all information on your own before undertaking reliance and actioning thereupon. www.rkshetty.com shall not be responsible nor liable for any consequential damages arising on account of your relying on the contents of the advertisement.
Privacy Policy
This site is the responsibility of www.rkshetty.com

We want you to

  • feel comfortable using our web sites
  • feel secure submitting information to us
  • contact us with your questions or concerns about privacy on this site
  • know that by using our site you are consenting to the collection of certain data
What Information is, or may be, collected from you?

We will collect certain anonymous information in standard usage logs through our Web server, including: computer-identification information obtained from "cookies," sent to your browser from a

  • web server and stored on your hard drive
  • an IP address, assigned to the computer which you use
  • the domain server through which you access our service
  • the type of computer you're using
  • the type of web browser you're using
We may collect the following personally identifiable information about you:

  • name
  • email address
  • ZIP/Postal code
  • demographic profile (like your age, gender,occupation and education);
  • financial information (like annual income or insurance policy number); and
  • opinions of features on our websites.
Who collects the information?

We will collect anonymous traffic information from you when you visit our site

We will collect personally identifiable information about you only as part of a voluntary registration process.

Our advertisers may collect anonymous traffic information from their own assigned cookies to your browser

The Site contains links to other Web sites. We are not responsible for the privacy practices of such Web sites

We offer a collection of online services which are available to you. Please understand that any information that is disclosed in these areas becomes public information. We have no control over its use and you should exercise caution when disclosing your personal information to anyone

How's the information used?

We use personal information to:

  • help us provide personalized features
  • tailor our sites to your interest
  • get in touch with you when necessary
We use contact information internally to:

  • direct our efforts for product improvement
  • contact you as a survey respondent
  • notify you if you win any contest; and
  • send you promotional materials
Generally, we use anonymous traffic information to:

  • remind us of who you are in order to deliver to you a better and more personalized service from both an advertising and an editorial perspective
  • recognize your access privileges to our Web sites
  • make sure that you don't see the same ad repeatedly
  • help diagnose problems with our server
  • administer our Web sites
  • track your session so that we can understand better how people use our sites
With whom will your information be shared?

We will not disclose any of your personally identifiable information to third parties unless:

  • we have your permission
  • special circumstances such as compliance with legal authorities
  • require disclosure
We will not use your financial information for any purpose other than to provide services to you.

What choices are available to you regarding collection, use and distribution of your information?

Supplying personally identifiable information is entirely voluntary. You are not required to register with us in order to use our site. However, we offer some services only to visitors who do register.

Upon request, we will remove your personally identifiable information from our database, thereby canceling your registration.

If we plan to use your personally identifiable information for any commercial purposes, we will notify you at the time we collect that information and allow you to opt-out of having your information used for those purposes.

All sites that are customizable require that you accept cookies. You also must accept cookies to register as someone for access to some of our services. e.g Online Portfolio. For information on how to set your browser to alert you to cookies, or to reject cookies, go to http://www.cookiecentral.com/faq/.

What security procedures are in place to protect information from loss, misuse or alteration?

To protect against the loss, misuse and alteration of the information under our control, we have in place appropriate physical, electronic and managerial procedures. For example, our servers are accessible only to authorized personnel.

Although we will endeavor to safeguard the confidentiality of your personally identifiable information, transmissions made by means of the Internet cannot be made absolutely secure. By using this site, you agree that we will have no liability for disclosure of your information due to errors in transmission or unauthorized acts of third parties.

Policy Updates

We reserve the right to change or update these policies at any time upon reasonable notice, effective immediately upon posting to this site.

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Disclaimer of Warranties
You expressly agree the use of the service is at your sole risk. The service is provided on an "as is" and "as available" basis. www.rkshetty.com expressly disclams all warranties of any kind, whether express or implied, including, but not limited to the implied warranties of merchantability, fitness for a particular purpose and non-infringement . www.rkshetty.com makes no warranty the services will meet your requirements, or the services will be uninterrupted, timely, secure, or error free. Nor does www.rkshetty.com make any warranty as to the results that may be obtained through the service or that defects in the software will be corrected. You understand and agree any material and/ or data downloaded or otherwise obtained through the use of the service is done at your own discretion and risk and you will be solely responsible for any damage to your computer systems or loss of data that results from the download of such material and/ or data. www.rkshetty.com makes no warranty regarding any goods or services purchased or obtained through the service or any transactions entered into through the service. No advice or information, whether oral or written, which you obtain from www.rkshetty.com or through the service shall create any warranty not expressly made herein. You acknowledge that www.rkshetty.com site may contain links to other web sites operated by third parties ("linked sites"). You acknowledge that, when you click on a link to visit a linked site, a frame may appear that contains the www.rkshetty.com logo, advertisements and/ or other content selected by www.rkshetty.com. You acknowledge that www.rkshetty.com and its sponsors neither endorse nor are affiliated with the linked site or any link contained in a link site, or any changes or updates to such sites. You also acknowledge that www.rkshetty.com is providing these links to you only as a convenience. www.rkshetty.com does not endorse in anyway any advertisers/ contents of advertisers on its webpages. Please therefore verify the veracity of all information on your own before undertaking reliance and actioning thereupon. www.rkshetty.com shall not be responsible nor liable for any consequential damages arising on account of your relying on the contents of the advertisement.
Privacy Policy
This site is the responsibility of www.rkshetty.com

We want you to

  • feel comfortable using our web sites
  • feel secure submitting information to us
  • contact us with your questions or concerns about privacy on this site
  • know that by using our site you are consenting to the collection of certain data
What Information is, or may be, collected from you?

We will collect certain anonymous information in standard usage logs through our Web server, including: computer-identification information obtained from "cookies," sent to your browser from a

  • web server and stored on your hard drive
  • an IP address, assigned to the computer which you use
  • the domain server through which you access our service
  • the type of computer you're using
  • the type of web browser you're using
We may collect the following personally identifiable information about you:

  • name
  • email address
  • ZIP/Postal code
  • demographic profile (like your age, gender,occupation and education);
  • financial information (like annual income or insurance policy number); and
  • opinions of features on our websites.
Who collects the information?

We will collect anonymous traffic information from you when you visit our site

We will collect personally identifiable information about you only as part of a voluntary registration process.

Our advertisers may collect anonymous traffic information from their own assigned cookies to your browser

The Site contains links to other Web sites. We are not responsible for the privacy practices of such Web sites

We offer a collection of online services which are available to you. Please understand that any information that is disclosed in these areas becomes public information. We have no control over its use and you should exercise caution when disclosing your personal information to anyone

How's the information used?

We use personal information to:

  • help us provide personalized features
  • tailor our sites to your interest
  • get in touch with you when necessary
We use contact information internally to:

  • direct our efforts for product improvement
  • contact you as a survey respondent
  • notify you if you win any contest; and
  • send you promotional materials
Generally, we use anonymous traffic information to:

  • remind us of who you are in order to deliver to you a better and more personalized service from both an advertising and an editorial perspective
  • recognize your access privileges to our Web sites
  • make sure that you don't see the same ad repeatedly
  • help diagnose problems with our server
  • administer our Web sites
  • track your session so that we can understand better how people use our sites
With whom will your information be shared?

We will not disclose any of your personally identifiable information to third parties unless:

  • we have your permission
  • special circumstances such as compliance with legal authorities
  • require disclosure
We will not use your financial information for any purpose other than to provide services to you.

What choices are available to you regarding collection, use and distribution of your information?

Supplying personally identifiable information is entirely voluntary. You are not required to register with us in order to use our site. However, we offer some services only to visitors who do register.

Upon request, we will remove your personally identifiable information from our database, thereby canceling your registration.

If we plan to use your personally identifiable information for any commercial purposes, we will notify you at the time we collect that information and allow you to opt-out of having your information used for those purposes.

All sites that are customizable require that you accept cookies. You also must accept cookies to register as someone for access to some of our services. e.g Online Portfolio. For information on how to set your browser to alert you to cookies, or to reject cookies, go to http://www.cookiecentral.com/faq/.

What security procedures are in place to protect information from loss, misuse or alteration?

To protect against the loss, misuse and alteration of the information under our control, we have in place appropriate physical, electronic and managerial procedures. For example, our servers are accessible only to authorized personnel.

Although we will endeavor to safeguard the confidentiality of your personally identifiable information, transmissions made by means of the Internet cannot be made absolutely secure. By using this site, you agree that we will have no liability for disclosure of your information due to errors in transmission or unauthorized acts of third parties.

Policy Updates

We reserve the right to change or update these policies at any time upon reasonable notice, effective immediately upon posting to this site.

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    • Top Performing Funds
    • Dividend Declared
    • New Funds Offer
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  • Motor Insurance
  • FD's & Bonds
  • Small Savings

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