How to invest with Srei | srei

How to invest with Srei

Here’s a look at the products available from Srei Infrastructure Finance (A PFI):

  • Non-convertible Debentures (NCDs)
  • Commercial Paper (CPs)
  • Preference Shares.

Advantages of NCDs:

The benefits of investing in Bonds of PFIs / NCDs of private sector companies are as follows:

  • Better Returns: NCDs in the past have offered interest rates which were quite attractive as compared to interest on other fixed-income options.
  • No Tax deduction at source: Unlike bank FDs or corporate FDs, there is no tax deduction at source (TDS) on NCDs offered in DMAT mode and listed on a stock exchange as per section 193 of the IT Act. Income tax on the interest income will have to be paid at the time of declaring one's income.
  • Higher Safety: Unlike corporate FDs which are unsecured, NCD issues by NBFCs are secured debt, which essentially means that NCD's are 100% secured by assets of the company. NCDs are also rated by credit rating agencies, which indicates the degree of safety regarding timely servicing of financial obligations.
  • Good Liquidity: NCDs offer good liquidity due to Stock Exchange listing (However listing does not guarantee liquidity). One could prematurely exit by either selling on the NSE if a buyer is available or exercise a put option if available.

NCD : Salient features

The features of an NCD in a nutshell:

  • NCDs are listed on stock exchanges. Hence, they provide liquidity to the holder.
  • The tenure of NCDs can be anywhere between 2 years and 20 years.
  • They are rated by rating agencies such as CRISIL, CARE and others
  • Most NCDs have payout options like monthly, quarterly, annual and cumulative interest
  • Non Convertible Debentures can be traded in the market like any other asset. Investors need not hold them until maturity.