Money tip: This plan set to give more money than PPF, FD or even RD

Money tip: Amid lowering fixed deposit (FD) interest rates, recurring deposit (RD) interest rates and rising prices of essential commodities, it has become difficult for investors to find investment options to beat inflation at the time of maturity of their investment. For such investors, IIFL Finance, one of India’s largest Non-Banking Financial Companies, is going to open a public issue of bonds on March 03, 2021. IIFL plans to raise up to Rs 1,000 crore from this issue and the company aims to use this money for its business growth and capital augmentation. The IIFL bonds offer up to 10.03 per cent yield and high degree of safety.

Speaking on the public issue of bonds Rajesh Rajak, CFO, IIFL Finance said, “Through a strong physical presence of 2500 branches across India and a well-diversified retail portfolio, IIFL Finance caters to the credit needs of an underserved population. The funds raised will be used to meet the credit needs of more such customers and accelerate our digital process transformation to enable a frictionless experience.”

Comparison with bank FD, PPF, small saving schemes
The IIFL Bonds offer the highest yield of 10.03 per cent per annum for tenors of 87 months. The NCD is available in various options like monthly, annual and at maturity.

In the current scenario, the rate of interest offered by IIFL Finance bonds is very attractive compared with other debt products. Liquid funds offer average net yields of 2.8 per cent to 3 per cent, ultra-short-term funds offer average net yields of around 3 per cent to 3.5 per cent., short-term funds offer average net yield is around 4 per cent to 4.25 per cent, while banks are currently offering an interest of around 5.1 per cent for a 3 year fixed deposit. In fact, small savings schemes like the Public Provident Fund (PPF) also give 7.1 per cent per annum growth on one's money.

This 10.03 per cent rate is also getting locked in for 87 months. This is a big advantage because, as liquidity eases in the post Covid world over the next few years, most experts believe that interest rates can head down and to lock-in good rates is a big advantage. Today the interest rates on 10-year government securities are at 6 per cent.

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Other details of IIFL Finance bond issue
The Fairfax and CDC Group backed IIFL Finance will issue unsecured redeemable non-convertible debentures (NCDs), aggregating to Rs 100 crore, with a green-shoe option to retain oversubscription up to Rs 900 crore (aggregating to a total of Rs 1,000 crore).

The credit rating has been AA by Crisil and AA+ by Brickwork. Through the crisis, credit rating of IIFL Finance has been reaffirmed by agencies, which indicates that the instruments are considered to have a high degree of safety for timely servicing of financial obligations and carry very low credit risk.

The lead managers to the issue are Edelweiss Financial Services Limited, IIFL Securities Limited and Equirus Capital Private Limited. The NCDs will be listed on the BSE Limited and National Stock Exchange of India Limited (NSE), to provide liquidity to investors. The IIFL Bonds would be issued at face value of Rs 1,000 and the minimum application size is Rs 10,000 across all categories. The public issue opens on March 03, 2021 and closes on March 23, 2021, with an option of early closure. The allotment will be made on a first come first served basis.