Government owned financial institution IFCI is offering NCDs at interest rates between 9.8 and 10 per cent making it an attractive proposition, for those looking at returns from fixed instruments.

Interest rates

1) Cumulative Option

Under the cumulative option the NCDs offer an interest rate of 9.90 per cent for 5 years and 10 per cent for 7 and 10 years.

2) Monthly Option

Under the Monthly Option the interest rate is 9.5 per cent for 5 years.

3) Annual option

Under the cumulative option the NCDs offer an interest rate of 9.90 per cent for 5 years and 10 per cent for 7 and 10 years.

Why you should subscribe to the offer?

a) Interest rates are attractive
Banks currently do not offer such high interest rates. The best one can get in a bank is 9.25 per cent. This makes the NCDs rather attractive.

b) Government owned entity

IFCI is a government owned entity and hence the NCDs are rather secure, despite the fact that the instruments do not have the highest rating currently.

c) Can lock-in money at high interest rates

IFCI NCDs offer an excellent opportunity to lock-in money at high interest rates. Since the instruments are of very long duration, there is no worry if interest rates in the economy fall.

d) Liquidity

Since the NCDs are to be listed on the NSE and BSE they will provide good liquidity.

Conclusion

In case of debt instruments, one does look for high interest rates, security and liquidity. In the case of the IFCI NCDs they offer all three, making them an excellent investment opportunity to lock money, if one is looking for cumulative of a regular interest plan. Especially good for retired folk.

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