Should you subscribe?
The company is offering an interest rate up to 11.75 per cent, under the three years option and upto 11.75 per cent under the five year option. There is also an option under the cumulative scheme where you can double your money in 6 years and 3 months.
The coupon rates on these NCDs are certainly attractive when one compares with interest rates on bank deposits. However, one must remember that bank deposits are extremely secure when compared to NCDs. Currently, banks offer interest rates of around 9 to 10 per cent interest rates on fixed deposits for similar duration. Also read NCDs or Bank deposits: Which are better?
However, Srei Infra Finance is a sound company and has a BWR AA & CARE AA- rating indicating high degree of safety.
An interesting feature of NCDs are there is no TDS on interest rate like fixed deposits, if one hold the NCDs in the demat form.
Overall, it seems the NCDs are attractive, but, one must remember that NCDs carry an element of risk.
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