SBI Retail Bonds at 9.95% for 15 years and 9.75% for 10 years

by Manshu on February 15, 2011

in Fixed Deposits

Another post from Suggest a Topic.

This time we’re going to cover the recently announced SBI retail bonds, and if last time was any indication these will become hot as hell when they open for subscription.

For this post I’m going to cover the features of these SBI Retail bonds, and then answer some questions leveraging what people asked last time around.

SBI Retail Bonds

SBI Retail Bonds

SBI Retail Bonds: Open and Close Date

I think only the open date is important in this issue because last time around the issue got over-subscribed the first day itself, and it’s quite likely that it gets over-subscribed this time again.

The open date for Tranche 1 is February 21, 2011 and close date is February 28 2011.

If you decide to buy these bonds, then I’d highly recommend doing so on February 21st itself. If you’re not able to buy them on February 21st then make sure to check how much they have been over-subscribed by since these SBI bonds are on first come first serve basis, and there might be no point in applying for them after the 21st.

Interest Rate on the SBI Retail Bonds

For retail investors these bonds will pay out 9.75% for the 10 years series, and 9.95% for the 15 years series.

10 years 15 years
9.75% 9.95%

There are banks that give you 10% for fixed deposits, but none of them allow you to lock in to that rate for this long a period. In that sense – these SBI bonds are offering quite a good deal compared to whatever is available at present.

I say at present because that’s important. When SBI came out with their retail bond issue last time around – there was a huge demand for that and it was a pretty sweet deal too. But, that was at a lower rate than the current offering, so you don’t know how interest rates are going to look like 5 years from now or 10 years from now.

Your money does get locked in with the SBI bonds since this is not like a fixed deposit that you can break at your will. If you go for the 10 years tenure then it will be redeemed at the end of 10 years.

SBI has the option of redeeming them at the end of 5 years and 10 years as well (more on that later), but they will only do so if the interest rates are lower at that point in time, so in that sense – keep in mind that you are committing to the redemption time period.

SBI Bonds will list on the stock exchange

These bonds are going to list on the stock exchange so you will have the option to sell them in the secondary market even if you can’t redeem them.

Keep in mind though that bond prices move about in the secondary market, so this is not the same as redemption because the prices will depend on the demand and supply plus the interest rates at that time.

Minimum and Maximum Application

The face value of one bond is Rs. 10,000 and that’s the minimum investment for the retail investor. The maximum application amount for the retail investor is Rs. 500,000.

Compulsorily in Dematerialized form

These bonds will not be issued in physical form, so you will need a demat account in order to apply for these bonds. Since this is a short point I’ll add that for the 3 of you who care these are unsecured bonds, but are rated AAA by CRISIL.

Can I get loans against these SBI Retail bonds?

No, you won’t be able to pledge these bonds like fixed deposits, and get loans against them. Similarly, you can’t break them before time like I said earlier.

Can NRIs apply for these bonds?

No, NRIs are not allowed to apply for these bonds.

When will the bonds start trading in the stock exchange?

You won’t have to wait for a long time for the SBI bonds to start trading on the stock exchange. If last time was any indication then the trading will start in less than a month of allotment.

What kind of listing gains can I expect?

I wish I knew because then I could make money without doing any real work, but alas that’s not to be. I’m sure there is going to be a lot of speculation around this, and the only input I can provide is that last time around the SBI retail bonds listed at a 5% premium.

Can I apply for the SBI bonds online?

No, there’s no option of applying for these bonds online – you have to necessarily apply using the physical form.

Is the interest from these bonds tax free?

I’ve had at least a couple of questions last time on this, and I think somehow the fact that the bonds are listed makes some people think that the interest is tax free or that there is no capital gains tax on it. This however, is not true – the interest is taxable, and if you make any capital gains selling the bonds then that’s liable to tax as well.

Where can I buy the SBI bonds from?

You can get the application form in a bank branch, and then fill it and submit it there. Someone told me last time that it helped to go to the bank before hand and get the forms and fill it because of the rush later on. I don’t know how true this will be for everyone, but sounds like a good idea.

What does the call option mean?

There is a call option with this bond which means that for the bond with 10 years tenure SBI has the option to redeem it after 5 years if they want to, and for the bonds with a 15 year tenure SBI has an option of redeeming it in 10 years if they want to.

Remember, this is their option – not yours. They will exercise it if they see it fit, but you can’t ask for buyback after 5 years if you want. In that sense this is different from the infrastructure bonds, which are the other bonds currently selling in the market.

I’ve tried to answer all questions I could think of, and have kept the post as simple as possible. Please feel free to ask any question that I have left out, and I’ll try to answer them, and of course there are a lot of other smart readers who answer questions these days, so you may not even need me.

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{ 125 comments… read them below or add one }

Natti February 16, 2011 at 2:13 am

Thanks for all the details.

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Manshu February 16, 2011 at 4:50 pm

You’re welcome Natti.

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RASHID A. DADLA February 16, 2011 at 6:12 am

A what intervals is interest paid, monthly, bi-yearly, annually or on maturity?

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Manshu February 16, 2011 at 6:59 am

Interest is going to be paid annually Rashid.

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Ashish Jain February 16, 2011 at 6:25 am

Thanks for this very comprehensive artical.

To RASHID A. DADLA:
Interest will be payable on annual basis.

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krish February 16, 2011 at 7:36 am

Small, silly doubt here… regarding call option, you had mentioned that if the interest rates have come down at the end of 5 years from the present levels, SBI may use the call option at end of 5 years for a 10 year Bond. And I also understand that it’s at the sole discretion of the bank to use the call option.

My question is, if SBI uses the call option, it’s the subscriber who can decide whether to use it or extend the bond till maturity period, right? It’s not something like a forced redemption if call option is utilized, right?

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acethecfaexam February 16, 2011 at 11:06 am

Yes it is. Usually callable means that the company can withdraw the contract. Here, the option lies with the bond issuer.

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Manshu February 16, 2011 at 4:51 pm

Yeah you could call it a forced redemption. If they call their bonds – you can’t refuse them, and they will pay you the money and redeem them.

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Rahul February 16, 2011 at 9:25 pm

CALL OPTION MEANS “RIGHT TO BUY”. ITS CALLED C+. THE OTHER SIDE TO IT IS C- i.e. OBLIGATION TO SELL. HERE SBI HAS THE RIGHT TO BUY & THE INVESTOR HAS OBLIGATION TO SELL. SO IF CALL OPTION IS EXERCISED, WE HAVE TO SELL IT.

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krish February 17, 2011 at 1:21 am

Hmmm, interesting!! Thanks Manshu, acethecfa & Rahul for answering my query. Anyone knows of a previous instance when a bond issued by a bank was redeemed using call option and investors couldn’t get the max returns?

Though I doubt interest rates will be lower at end of 5 years from the present levels, looking at the way Indian economy is heating up and inflation soaring.

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Manshu February 18, 2011 at 10:13 am

I think these issues just started recently so I don’t think there has ever been a precedent of them.

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Amit February 16, 2011 at 8:28 am

Manshu Hi,

Thanks for posting this well researched and informative piece. I do not how how to clauculate the payout on these bonds. Could you please illustrate the payout on say an investment of 1 Lakh (in the Sbi bonds) for a duration of both 10 yrs and 15 yrs. I would highly appreciate it.

Rgds,
Amit

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Manshu February 16, 2011 at 4:53 pm

Since they are going to pay out interest annually this is simply the amount of interest in your principal every year.
So, if you invest for 10 years then you will get 9,750 for the first 9 years as the interest, and at the end of tenth year you will get 109750.

The interest is fully taxable so tax will depend on the slab that you’re in and I’m not considering it here.

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Neel February 16, 2011 at 9:55 am

How can I sell these bonds on the exchanges? I am not able to find the code for the earlier bonds issued by SBI.

PS: In other words, how do I buy the bonds issued by SBI a few months ago, from the market?

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Manshu February 16, 2011 at 4:55 pm

Another reader – Parth Patel had answered this question earlier, so I will just paste his response here:

“Pankit,
You do not require a different platform, they can be sold normally like any other stock.
In Odin, the NSE scrip id is 20518 for the N1 bonds (9.25%), and 20520 for the N2 bonds (9.5%).
Give your broker this info if you need help with Odin.”

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acethecfaexam February 16, 2011 at 11:13 am

Thanks for the information on the bonds. It seems like a good return on a relative low-risk investment. Since 10/15 years is a long time (relatively), do you know if beneficiaries can be added to the bonds?

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Manshu February 16, 2011 at 4:53 pm

You can nominate someone – yes.

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Rishi Kumar February 16, 2011 at 9:24 pm

Thanks! for the arcticle.

If I Invest as aretail investor then I would be eligible for 9.75% on 10 year bond while the non retail investors would be eligible for lower interest.

Then if I have to sell the bonds then can I sell to any investor (institutional or retail) or I have to sell to other retail investor only and through an exchange how can i monitor that?

Would there be separate listing for the retail and insitutional bonds for similar tenor.

can the inistutions later buy the higher interest rate bonds through the stock exchange??

Regards
Rishi Kumar

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Manshu February 18, 2011 at 10:27 am

Yes you can sell to anyone on the secondary market, and they will be listed separately and have different prices as well.

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sohil February 16, 2011 at 9:55 pm

hi, i want to ask if there will be tax deducted at source on the interest on these bonds. Normally TDS is not there on demat bonds if i am right. It would be of great help if you can clear my doubt.Thank you.

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Manshu February 18, 2011 at 10:27 am

I don’t think there would be but I myself am not very sure about that.

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Shiv February 18, 2011 at 11:03 am

Hi Sohil.. There would be a TDS on these bonds if the interest amount exceeds the prescribed limit of Rs. 10,000, in a Financial Year..

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Manshu February 18, 2011 at 11:31 am

Thanks Shiv – appreciated as always.

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Ravi February 16, 2011 at 10:38 pm

Hi,
Couple of questions:
1) Why do we say money is “locked” in this article?. As its mentioned as we go below in the article, we can always sell it in the market once its listed. So, technically we are not locked . Just wanted to understand this.

2) Wondering why only SBI only is offering bonds and no other big banks are offering the same (and that too in such quick succession).

Cheers,
Ravinder

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Shiv February 17, 2011 at 5:57 am

Hi Mr. Ravi

Its mentioned here as locked because SBI will not buyback the bonds from the investors during the tenure of the bonds and the market liquidity is subject to the availability of sufficient no. of buyers for these bonds.

Nobody can answer why other banks are not offering these kind of bonds but I think SBI is offering these bonds to popularise the corporate bond market for its bonds and to make retail investor friendly image for itself, apart from the requirement of long term funds.

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acethecfaexam February 17, 2011 at 3:21 pm

It could also be that the bank’s outlook on interest rates is bearish. If the bank wants to raise more capital but expects interest rates to be higher in the near-term (5 years when the first bond becomes callable) and perhaps also in the long-term (10 years), then it’s a good deal from the bank’s perspective.

If that is the true case, we should expect to see other banks issuing such bonds if there is consensus on that outlook.

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Shiv February 16, 2011 at 11:13 pm

Hi All

The SBI Bonds are going to attract Long Term Capital Gain Tax of 20% with indexation and 10% without indexation. So if an investor applies for these bonds & sells them after March 31, 2012, he/she will get “Double Indexation Benefit”. Taking benefit of this & paying 20% with indexation, the tax liability would be almost near to zero or probably notional Capital Loss itself. So the investor will have a good time paying no taxes at all.

Suppose you invest Rs. 1,00,000 in these bonds, Cost Inflation Index (Notified by the Govt. every year) for 2010-11 has been 711 and assuming it to be 806 for 2012-13, your Cost of Investment comes out to be 1,13,361 (1,00,000*806/711). Taking into account 9.95% interest, the market value at that point in time would be near about Rs. 1,11,000. So there would be a notional Capital Loss of Rs. 2,361. I would recommend investors to apply for these bonds as its an all gain investment whether you want to invest for 9.95% (15 years)/9.75% (10 years) interest, Short Term Listing Gains or Long Term Capital Appreciation. These rates are very attractive from a bank like SBI. These bonds are just 2nd to RBI Bonds. Happy Investing!!

To invest in SBI Bonds or for any other info you can Call/SMS us at 9811797407 (For Delhi, Gurgaon & Noida).

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prakash February 17, 2011 at 3:20 am

is the interest cummulative/compound?

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Shiv February 17, 2011 at 5:59 am

Hi Mr. Prakash… Interest is paid annually..

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saurabh maheshwari February 17, 2011 at 9:02 am

hi
SBIN-N2 is quoting 10,355. they will pay interest on 02/04/2011.
Let suppose i buy it today from nse/bse.
then will i get interest from today???
or from the date of issue of bond???

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Manshu February 18, 2011 at 9:35 am

Interest will be paid to the person who holds it at the record date. It doesn’t matter when you buy it as long as you own the bond on the record date you will get the interest. The price of the bond will of course adjust accordingly.

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saurabh maheshwari February 18, 2011 at 10:30 pm

hi, thx for the reply
i have another question.
isn’t SBIN-N1 running in discount???
yesterday quote was 10,231.63
but it’s value is 10,000+268(interest accumulated from 4-11-10to18-02-2011)=10,268

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Manshu February 20, 2011 at 5:22 pm

Don’t know about that. I have no real world experience of dealing in bonds so there might be something I’m unaware of and I’d rather not comment with my part knowledge.

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Milind February 17, 2011 at 11:13 am

Since the interest rate for Indivisual and HNI are differnt how much liquidity will be there for bonds purchased by retail people

i.e. Can Retail buy 15 yr bond 9.95 and sell it on listing date and same can be bought by HNI

My worry is if all retailers try to sell on listing date and if HNI cant buy them I doubt if retailer would find any buyers

Thanks

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Manshu February 18, 2011 at 9:32 am

Yeah, they’ll be marked with different series and will trade for different prices due to the varying interest rates so there is no restriction on buying from the secondary market when it lists.

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PRASHNT GUPTA February 17, 2011 at 10:40 pm

HOW MUCH TIME IN LISTING & ALLOTMENT IN SBI BOND ?
HOW MUCH MAX.TIME GIVEN FOR LISTING & ALLOTMENT BY SBI ?

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Manshu February 18, 2011 at 9:26 am

Within a month (please don’t use all caps as it’s harder to read).

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Kapil February 17, 2011 at 11:35 pm

SBI Bonds can be purchased online too from edelweiss broking..
Hope this helps people from the hassle of going to bank branches…
Am not sure about other brokers ..hopefully others also should be following the suit….

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Manshu February 18, 2011 at 9:18 am

Thanks for this info Kapil – have you used this option yourself? I’m a bit surprised that the online option is available since I don’t think it was there last time around at all.

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Shiv February 18, 2011 at 9:52 am

Yes thats right.. Edelweiss Broking is offering the option of applying it online.. I’ve my Demat A/Cs. with both Edelweiss & Kotak.. Kotak is not offering this facility..

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Kapil February 19, 2011 at 10:14 am

Shiv,
I too have Demat A/c with both edel and kotak…Nice to see member like me…

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Shiv February 19, 2011 at 10:27 am

Cheers Kapil!!… :-)

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Kapil February 19, 2011 at 10:13 am

Hi Manshu,
I have used this option by edelweiss for purchasing the ifci infrastructure bonds..
In fact it is just one click ..;)

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Shiv February 19, 2011 at 10:30 am

Edelweiss Broking website is quite user friendly..

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Manshu February 19, 2011 at 10:54 am

yes – thanks Kapil – that was a very useful piece of info and I actually wrote a full post about it with due credit to you. Did you see that yet?

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Manshu February 20, 2011 at 5:13 pm

Awesome – thanks again!

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Sunket February 18, 2011 at 4:04 am

Hi,

Thanks for the details on SBI bnds. I wish to know if I can apply in physical form?
R only in demat?

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Manshu February 18, 2011 at 9:14 am

No, you need a demat account.

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sunket February 21, 2011 at 5:44 am

Thanks Manshu…
It is little odd to see SBI bonds require Demat accts but doesnt allow to apply online brokerages … what clould be the reason?

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naresh February 18, 2011 at 4:14 am

how much time taken by bank to list the bond in nse bse

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Manshu February 18, 2011 at 9:14 am

less than a month.

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naresh February 20, 2011 at 11:26 pm

thanks manshu

pls tell me if i will sell my bonds after three month can i receive my interest ?

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Manshu February 21, 2011 at 4:59 pm

No, I’d expect the first interest payment to be in April of next year, so as far as I can tell you won’t get any interest. The price may be higher (in all likelihood) than what you paid for but you won’t get any interest.

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Neel March 1, 2011 at 10:30 am

I dont think so Manshu. They will pay the interest however small it may be on 2nd April.(else they would have to compound the interest) Also the prospectus talks about 4% interest rate for people who did not get allotment and 7% for the people who did get it. The prospectus says this interest will be credited separately(2 separate transactions. Refund interest and if applicable, refund)

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Manshu March 1, 2011 at 3:17 pm

Neel,

Thanks for your comment, and I think what you say makes sense. In fact, holders of infra bonds recently got a small credit in their bank accounts like some 36 bucks in one case or something which was the refund of application money, so what you’re saying appears to be correct.

SBI will pay interest on the bond from allotment to 2nd April, however small that may be.

Thank you for pointing out my error, and I apologize for the mistake.

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Neel March 2, 2011 at 2:59 am

Ah, no error mate. In fact, this was the most comprehensive article I found on SBI Bonds! Thank you for that.

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TCB February 18, 2011 at 9:06 pm

In this issue, HNI / QIB are issued bonds at 9.3% (10 year) & 9.45% (15 year). Will these bonds be listed separately from bonds issued to retail which are of different coupan rate of 9.75% (10 year) & 9.95% (15 year) ? If yes, are QIB / HNI allowed to buy the bonds of 9.75% & 9.95% coupan rate, from the stock exchange after listing ? or 9.75% & 9.95% bonds are reserved only for retail even after listing ?

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Manshu February 20, 2011 at 5:24 pm

Yes, the bonds will be listed separately, and there is no reservation after the listing.

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Taurus February 18, 2011 at 10:22 pm

Hi,

Where can I get the apllication form. Can anyone post the list of branches. Also will the application form will be available today in SBI branches?

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Shiv February 19, 2011 at 10:57 am

Hi… You can apply for these bonds through some Designated SBI branches (not all) and through Brokers or Independent Financial Advisors like us..

To invest in SBI Bonds or for any other info you can Call/SMS us at 9811797407 (For Delhi, Gurgaon & Noida).

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Manshu February 20, 2011 at 5:23 pm

There is a comment at this post which has a list of branches that are offering the bonds. I’m unable to verify how accurate it is so not bumping it to a post. You can check it out and see if it’s right or not.

http://www.onemint.com/2011/02/18/apply-online-for-the-sbi-bond-issue/

Better than not having info at all I guess.

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Sanjeev Mehrotra February 18, 2011 at 11:41 pm

Kindly let me know , SBI bonds is tax saving bond like IFCI Boand?

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Shiv February 19, 2011 at 10:38 am

Hi Sanjeev.. SBI Bonds are not tax saving bonds.. & there would be a tax liability also on the interest earned @ 9.75%/9.75%..

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Manshu February 20, 2011 at 5:21 pm

No, there’s no tax saving involved in this. In fact you will have to pay capital gains tax and the interest income is taxable as well.

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Taurus February 18, 2011 at 11:46 pm

Is the application form already available at SBI branches?

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Manshu February 20, 2011 at 5:20 pm

If it wasn’t earlier, then it surely must now.

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Salar February 19, 2011 at 5:09 am

Thanks Manshu. What are your views on RBI review in mid march?. AM of the opinion that since food inflation has reduced, there wouldnt be another hike. Also short term rates would ease as liquidity improves. In that case, this bond would make good investment for risk averse investors in lower tax bracket. Also it can result in good trading gains as yields drop. One can make a quick buck and move out :). I just wrote an entry in my blog. Do let me know your comments

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Manshu February 20, 2011 at 5:17 pm

I have actually absolutely no thoughts on the RBI review – haven’t given any thought to it. As for quick bucks – I strongly feel that there is no such thing. Listing gains and quick bucks and things like that give a 4 or 5% return in a transaction, but then you make one big loss that wipes out everything.

I believe in investing for the long run and ignoring all the other noise.

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blagarwal February 20, 2011 at 2:12 am

can anybudy tell me expected date of listing and number of listng and way of listing i.e. for retail and hni in different code as the rate is differrent.?

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Manshu February 20, 2011 at 5:09 pm

The listing will be within a month of closing the issue and the listing will all the different series will be under different names. They will have different codes, but I don’t think those codes are out yet.

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sunket February 21, 2011 at 5:46 am

It is little odd that SBI bonds require Demat acct but they dont allow to apply online brokerages …
what clould be the reason?

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Manshu February 21, 2011 at 4:51 pm

Sunket – I’m guessing operational difficulties or rather steps that SBI had to take which it couldn’t do in time. Having said that, a reader informed that SBI bonds are available through Edelweiss online. You might have already gleaned that from comments though.

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sunket February 21, 2011 at 11:04 pm

yeah, I have read frm the comments, but then I dont have a brkerage acct with Edelwess!

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Shiv February 22, 2011 at 7:32 am

Hi Sunket.. Dont lose heart as these kind of bond issues will keep coming now every quarter from the SBI. Most of the people in the Financial Services industry or involved with such things were unaware of the online facility to apply for these bonds till Feb. 16th-17th. This facility was not avavilable when I applied last time in October 2010. I’m the proprietor of a franchise of Edelweiss Broking, Ojas Capital. Even I was not not aware of this facility till Feb. 17th morning & pleasantly surprised to see it. But truly speaking it was really very easy applying for the bonds online. It took me less than 2-3 mins. to get the funds transferred from my bank a/c. & apply for these bonds online. I hope, going forward, the facility is there with most of the brokerages so that all the investors could benefit from it.

Also let me try to explain the reason for SBI to make it mandatory to have a Demat A/C. to apply for these bonds. Indian Corporate Bonds Market lacks the required depth. I think SBI wants to have a huge trading bond market for its bonds and also popularize these bonds among the retail investors. Thats the reason SBI is coming out with such big issues like this one and giving such an attractive interest on the bonds.

To invest in SBI bonds, get the Edelweiss Demat A/C. opened or for any more info about these bonds Call/SMS 9811797407 (Delhi, Gurgaon or Noida).

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Preeti Maurya February 22, 2011 at 1:23 am

U can definitely apply it online.. i have applied thru my Edelweiss brokin a/c..ie if ur broking house has da online facility u can apply it.. Tis facility has rly saved so much time..

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ANISH SHARMA February 22, 2011 at 1:28 pm

hi all,

is it worthwile to invest in Bonds. I mean my father invested in some bonds and when they got matured the value for money was so less and I figured out that after 10 years 9.75 would mean nothing.

It’s better to go for MF or Shares than going for these bonds i guess.

Any comment?

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Manshu February 22, 2011 at 6:54 pm

The interest is going to be paid out annually in this, so you will get interest at 9.75% per year, and at the end of 10 years (or 5 years if SBI exercises that option) get the 10k back.

It’s not right to compare equity returns with bonds because the risk in those two is totally different. Equity investments can go down fairly quickly quite steeply, whereas bonds, especially those from SBI are quite safe.

In your situation you have to see what your risk profile is – what your other investments are, and then see if a bond issue fits into the overall scheme of things. A generic yes it is worthwhile, or no it’s not, while convenient is a completely useless answer unless you consider your own individual situation.

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anish sharma February 25, 2011 at 6:54 pm

Thanks ..one question..there’s tax benefit for 20k for these bonds right. Would that be applicable only once or every year?

I think it would be one year only but not sure.

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Vinay S Shastry February 25, 2011 at 10:39 pm

No.

No tax benefit whatsoever.

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Manshu February 26, 2011 at 2:35 pm

No Anish – there is no tax benefit from these. The tax benefit is from the infrastructure bonds, and theses have nothing to do with them.

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Vinay S Shastry February 23, 2011 at 3:19 am

A fixed deposit alternative:
Canara Bank offers a pretty good interest rate on long term FD: 9.5% for 8 years & above to 10 years.

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Manshu February 23, 2011 at 2:15 pm

Thanks for that info Vinay.

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Biswajit Gayen February 23, 2011 at 10:13 am

please send me an application form for 10 years tax saving bond.

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Salar February 25, 2011 at 5:45 am

u can get it from the nearest SBI branch

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Milind February 25, 2011 at 9:08 am

I think for retail the issue is 1000 CR
Does any one has idea if retail portion is fully subscribed or not ?

Also SBI has 10,000 CR green shoe option for retail investor and hence does that mean all retailers will get 100% allotment ?

Thanks
Milind

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Manshu February 25, 2011 at 5:07 pm

Yeah it looks like it is already over-subscribed – see this Indian Express link:

http://www.indianexpress.com/news/SBI-bond-issue-oversubscribed-over-4-times/754701

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Milind February 25, 2011 at 10:27 pm

Yeah retail is around 4 times subscribed means its at 4000 CR
But they have green shoe option for retail till 10000 CR

So does that mean all retails will get full allotment ?

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Manshu February 26, 2011 at 2:33 pm

No, that doesn’t mean 100% allotment for sure. It’s their option to extend it or not, and I guess they will state in the coming week what they plan to do.

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Neel March 2, 2011 at 3:05 am

I read this : http://economictimes.indiatimes.com/markets/bonds/sbi-bonds-plans-to-retain-retail-over-subscription-under-issue/articleshow/7609939.cms and it’s pretty unclear.

One line says “State Bank of India today said it plans to retain a portion of the retail over-subscription to its tax-saving bonds issue, which will take the total amount raised through the mega issue up to Rs 5,500 crore” and another says, “As against an allocated Rs 1,000 crore, subscription by retail investors stood at Rs 4,500 crore, while an additional subscription of nearly Rs 4,000 crore came from other investors, including high net-worth individuals. ”

Firstly, these bonds are not tax saving! And secondly the PTI reporter does not know elementary mathematics.

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Shiv March 2, 2011 at 8:42 am

Hi Neel.. As far as the tax saving part is concerned you are right in pointing out that these are not tax saving bonds.. Its a tax saving season & every other company (IDFC, PFC, L&T, REC etc.) is coming out with tax saving bonds except SBI which is not an IFC status company so it cant issue tax saving bonds.. so probably by mistake they got it printed… :-)

But the calculations done by these guys are not wrong.. let me do it for you:

Issue Size: Rs. 1,000 Crores
Green-Shoe Option: Rs. 1,000 Crores
Issue Size (including the Green-Shoe Option): Rs. 2,000 Crores
Reserved for QIBs & HNIs: Rs. 1,000 Cr. (25% each of 2,000 Cr.)

Issue Subscribed: Rs. 8,500 Crores
Issue Subscribed by the Retail Investors: Rs. 4,500 Crores
Issue Subscribed by QIBs & HNIs: Rs. 4,000 Crores

Allotment to the Retail Investors: Rs. 4,500 Crores (Full)
Allotment to QIBs & HNIs: Rs. 1,000 Crores (Partial)
Total Amount Raised: Rs. 5,500 Crores

So out of Rs. 8,500 Crores SBI is going to return Rs. 3,000 Crores to QIBs & HNIs & retain all the over-subscription from the retail investors.. so Beer Mug is full for the retail investors.. Cheers!! :-)

For more info Call/SMS 9811797407 (Delhi, Gurgaon & Noida)

Reply

Neel Arurkar March 4, 2011 at 2:57 am

Looks good Shiv. I don’t understand the word ‘PORTION’ used here though ‘State Bank of India today said it plans to retain a portion of the retail over-subscription to its tax-saving bonds issue’

I hope they retain all the retail subscription!

Reply

Jenish March 10, 2011 at 6:42 am

Hi,

Can anybody please tell me what is the allotment date for SBI bonds? And when is the listing?

Thanks,
Jenish

Reply

Manshu March 10, 2011 at 5:27 pm

I don’t think that’s been declared that Jenish – it should be within a month of closing date, so can’t be too far away.

Reply

Neel March 16, 2011 at 2:25 am

I called Datamatics on 022-66712156 today and they said they will be done with allotment by tomorrow.

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Manshu March 16, 2011 at 5:26 pm

Excellent!

Reply

Shiv March 16, 2011 at 11:42 am

Hi

The allotment has been done. Please check this link with your respective Application Nos.: http://www.dfssl.com/iposerv/SBIBONDS2011.asp

Reply

Shiv March 16, 2011 at 11:46 am

Also the expected listing date is March 23rd.

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Neel March 16, 2011 at 12:29 pm

Super. They have also paid 7% interest as promised. Am happy and smiling :-)

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Manshu March 16, 2011 at 5:23 pm

That’s quite awesome! They did a prompt job and didn’t leave people hanging like some of the infra bond issues.

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Shiv March 17, 2011 at 2:25 am

hey more smiles would come on listing.. so keep saving your smiles for the listing day.. all is well here till now.. only thing which is required now is a good no. of buyers for these bonds in the market.. thats it!!.. Hip Hip Hurrrrrahhh in the making!!… :-)

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Manshu March 16, 2011 at 5:24 pm

Thanks for the info Shiv – much appreciated – this will help a lot of folks and I’ll make a mini post out of it soon.

Reply

neel March 17, 2011 at 1:50 am

now the RBI plays spoilsport :( couldn’t have they waited till next weekend to announce the hike in repo rates…

Reply

Shiv March 17, 2011 at 2:32 am

No spoilsport here Neel.. it was widely expected & RBI was as honest about Inflationary Expectations as it could be amid false figures & hide & seek plays in all Governmental communications.. so full marks to RBI for its Credit Policy.. 2022 G-Secs. yield moved up only marginally to 8.08% from 8.06% after the announcements made.. so just keep your :-) intact..

Reply

Neel March 17, 2011 at 1:33 pm

Yup, you are right :-) Am waiting for 23rd March. And then for the next tranche ;-)

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Neel March 18, 2011 at 1:13 pm

SBI interest credited to my bank account. At 7%, they have paid me interest for 21.326 days. My money was with them only for 21 days. Can’t figure out how!

Reply

keyur March 28, 2011 at 3:39 am

HI NEEL

I HAVE STILL NOT CREDITED ANY KIND OF INTEREST THOUGH I HAVE ALLOTED BOND.

WHAT SHOULD I DO?

PLZ SUGGEST ME AND MIAL ME ON MY MAIL ADDRESS.

Reply

Shiv Kukreja March 28, 2011 at 12:03 pm

Hi.. plz write a mail to “Datamatics Financial Services Limited”, the Registar for the SBI Bonds Issue at Investor Grievance ID: sbi_eq@dfssl.com

Reply

Jenish March 22, 2011 at 9:43 pm

What is a BSE code for current SBI bond of 9.95%?

Reply

Shiv Kukreja March 22, 2011 at 10:34 pm

961703

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Jenish March 22, 2011 at 11:16 pm

Thanks.. Do you know on which site we can see updated price for this bond?

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Shiv Kukreja March 23, 2011 at 12:27 am

Go to http://www.nseindia.com > Type SBIN in “Get Quote” > Select N5 under “Other Series”…

Reply

Shiv Kukreja March 23, 2011 at 12:30 am
rajesh gupta April 4, 2011 at 8:26 pm

i have 20 bonds alloted by sbi (9.95% interest)
but till now i dont receive any interest payment by sbi till 31.03.2011. due to wrong address in my dmat a/c, now i have corrected my address, how can i get the interest back,
plz help

Reply

Neel April 6, 2011 at 11:09 am

As Shiv pointed out, email them on sbi_eq@dfssl.com. Or you can call them on Tel: +91-22-66712151 – 2156

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Manshu April 6, 2011 at 4:26 pm

Thanks for that Neel – your help here is much appreciated. Too much to handle on my own.

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Orso May 3, 2011 at 10:43 pm

Does anyone know the record date for SBI bonds 10/15 yr N3/N5 ?Also will the premium inctrease as record date approaches , and fall after record date ?

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Shiv Kukreja June 3, 2011 at 3:51 am

Hi

IFCI Ltd. (BSE:500106 NSE:IFCI) has now come out with its Tier II Bonds Issue fetching 10.75% interest. The issue is quite similar to the SBI Bonds Issue. IFCI Bonds are going to trade on BSE upon listing, so though the duration of 15 years is quite long, liquidity will not be a problem.

Key Points of the Issue are:

> Interest Rate of 10.75% p.a. (15 Years) & 10.5% p.a. (10 Years), which makes the issue quite attractive
> Easy liquidity as the bonds are going to list on BSE
> No TDS
> Issue Size: Rs. 150 Crores with a “green-shoe option” to retain over-subscription
> Bonds will be issued in the Demat mode only

The bonds are most suited to those investors who want to earn better interest on their investments as compared to Bank Fixed Deposits. Issue opens on June 1st & Closes on July 15th but its expected that the issue will get closed much before July 15th as & when IFCI achieves its target.

To invest in IFCI Tier II Bonds (10.75% or 10.5%) or for any other info you can Call/SMS us at 9811797407 (For Delhi, Gurgaon & Noida).

Reply

prakash March 21, 2012 at 3:55 pm

Hi,I was alloted 10 bonds aginst 21-feb-2011 issue. When will be interest credited to the account?

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Shiv Kukreja March 21, 2012 at 10:59 pm

Hi Prakash

Interest payment date is April 2nd every year.

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prakash March 22, 2012 at 10:20 am

Thanks a lot Shiv.

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Chet Kamal Parkash October 23, 2012 at 6:04 pm

In India, the government’s financial year runs from 1 April to 31 March. 1st of April is holiday for banks. So, Interest payment date is April 2nd every year.

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R.K.Mahajan November 26, 2012 at 5:11 pm

Dear Sir,

I am having 5 bonds of Stte bank of India each with face value of Rs10000 at an interest rate of 9.25% (to be paid annually) allotted in January ,2011. Can I know the script number and code of its listing on BSE.

(R.K.Mahajan)

Reply

Shiv Kukreja November 26, 2012 at 8:20 pm

Dear R.K. Mahajan,
Please check the below pasted link, these SBI bonds pay 9.25% interest. The scrip code is 961692, but the date of allotment is November 4th, 2010.

http://www.bseindia.com/stock-share-price/state-bank-of-india/sbibondsi/961692/

Reply

virbhadra udage March 8, 2013 at 2:35 pm

i want information about sbi bonds date when open.

Reply

R.YOGA PRASAD January 13, 2014 at 2:58 pm

I AM INTERSTED IN INFLATION BONDS MY DATE OF BIRTH 16-NOV-1954 PL ARRANGE TO PROVIDE COMLETE DETAILS MY PHONE NO 08978873009.

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