The Non Convertible Debentures (NCDs) of Shriram Transport open for subscription today, July 2, 2014. Here are 5 reasons why you should subscribe to the same.
Decent interest rates
The NCDs offer an excellent interest rate of up to 11.50 per cent making them a great investment opportunity. For 36 months the interest rate on the cumulative and the annual scheme is 11 per cent per annum, which is way higher than bank interest rates. The 60 months deposits offer a interest rate of 11.25 per cent per annum.
Good rating and strong pedigree
The NCDs have been rated 'CARE AA+' by CARE, 'IND AA+' by India Ratings & Research & 'CRISIL AA /Stable' by CRISIL. This makes for great safety from the risk of default from payment of interest and principal amount.
The NCDs offer you liquidity as you can sell them on the BSE or NSE where they will be listed. However, it's important to note that the liquidity may not be high which means you may not be able to sell large quantities.
Interest income taxable
There would be no TDS if you hold the NCDs in electronic form. However, you must remember that interest income is not tax free and you have to add it to total income to determine tax liability.
Hedging against interest rate fall
There is a probability that interest rates may fall going forward. Should that happen, you need not worry, as you have locked money in the NCDs at a higher rates.