Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956,
Engaged in the financing and promotion of transmission, distribution and generation including renewable energy projects throughout India
REC is one of only 16 Indian public sector undertakings to be granted “Navratna” status by the Department of Public Enterprise
by virtue of its operational efficiency and financial strength
66.80% shareholding in REC is held by Government of India acting through Ministry of Power.
GoI has rated RECs performance as “Excellent” continuously since Fiscal 1994
Registered as a Non Deposit taking NBFC with Reserve Bank of India. RBI has further categorized REC as an IFC (Infrastructure Finance
Company)
Credit Ratings indicating highest safety: “CRISIL AAA/Stable” by CRISIL, “CARE AAA” by CARE, “INDAAA” by
IRRPL and “[ICRA] AAA” by ICRA
SALIENT FEATURES OF THE PROPOSED TAX FREE BONDS
The CBDT, MOF, GoI, by virtue of powers conferred upon it under item (h) of sub clause (iv) of clause (15) of Section 10 of the Income Tax
Act, 1961, has issued notification authorising REC to issue Bonds for an amount aggregating to Rs. 5,000 crores in one or more Tranches
during the financial year 2012-13. Out of the allocated limit of Rs. 5,000 crores, REC has raised Tax Free Bonds aggregating to Rs. 500
crores on private placement basis on November 21, 2012. Consequently, the Shelf Limit stands reduced to Rs. 4,500 crores. This Tranche-1
Issue is of Bonds aggregating to Rs. 1000 crores (Base Issue) with an option to retain oversubscription upto the Shelf Limit (Rs.4500
crores).
Tax benefits u/s 10 (15) (iv) (h) of the Income Tax Act, 1961 – interest on these Bonds shall not form part of total income.
Credit Ratings of “CRISIL AAA/Stable” by CRISIL, “CARE AAA” by CARE , “[ICRA] AAA” by ICRA & “IND
AAA” by IRRPL indicating Highest Degree of Safety in terms of timely servicing of financial obligations.
Allotment would be on first come first serve basis based on the date of upload of the application on the electronic system of the stock
exchanges.
Bonds are proposed to be listed on the BSE and NSE.
Bonds to be allotted in dematerialized form as well as in physical form, at the option of the applicants but tradable in dematerialized
form.
Please note the following about subscribing to this bond issue:
ISSUE STRUCTURE:
Options/ Series of Bonds*
Tranche 1 Series 1
Tranche 1 Series 2
Frequency of interest payment
Annual
Annual
Minimum application size
5 Bonds (r 5,000) across both the Series
In multiples of
1 Bond (r 1,000)
1 Bond (r 1,000)
Face value (r /Bond)
r 1,000
r 1,000
Issue price (r /Bond)
r 1,000
r 1,000
Mode of payment
Through various modes available**
Through various modes available**
Coupon rate (%) per annum for Category I, II, III and IV
7.22
7.38
Additional Coupon rate (%) per annum for Category IV***
0.50
0.50
Aggregate Coupon rate (%) per annum for Category IV***
7.72
7.88
Coupon Type
Fixed Coupon Rate
Fixed Coupon Rate
Effective Yield (%) per annum for for Category I, II and III
7.22
7.38
Effective Yield (%) per annum for for Category IV***
7.72
7.88
Put / Call Option
There is no put/call option for the Bonds
There is no put/call option for the Bonds.
Tenor
10 years
15 years
Redemption Amount (r/Bond)
Repayment of the face value along with any interest that may have accrued
at the Redemption Date
Maturity/Redemption Date
10 years from the Deemed Date of Allotment
15 years from the Deemed Date of Allotment
Nature of Indebtedness and Ranking/ Seniority
The claims of the Bondholders shall be superior to the claims of any
unsecured creditors, and shall rank pari passu with other secured
creditors having a first pari passu charge on the identified immovable property(ies) of the Company and/or first pari passu charge
on
the book debts of the Company that are charged as security under this Issue.
HIGHLIGHTS OF TAX BENEFITS
Interest from these Bonds shall not be included in total income of any person as per provisions of Section 10 (15) (iv) (h) of Income Tax
Act, 1961.
Since the interest income on these Bonds is exempt from tax, no Tax Deduction at Source is required.
Wealth Tax is not levied on investment in bonds under section 2(ea) of the Wealth-tax Act, 1957
The Bonds being listed with BSE & NSE shall be treated as a long term capital asset if they are held for more than 12 months and
therefore capital gains arising on the transfer of Bonds shall be subject to tax at the rate of 20% of capital gains calculated after
reducing indexed cost of acquisition or 10% of capital gains without indexation of the cost of acquisition.
