Power Finance Corporation (PFC) 80CCF Infrastructure Bonds

by Manshu on October 4, 2011

in Fixed Deposits

Power Finance Corporation (PFC) is the second company after IFCI to come out with their 80CCF infrastructure bonds.

These bonds help you get tax benefit over and above the Rs. 1,00,000 that you get by investing in Section 80C tax instruments.

The face value of each bond is Rs. 5,000 and PFC will come out with an issue size of Rs. 200 crores or Rs. 2 billion.

These bonds are secured, and rated AAA/Stable from CRISIL and AAA with stable outlook by ICRA.

The bonds will be available in both Demat and physical form, and these are the other terms of the PFC infrastructure bonds.

Terms of the PFC 80CCF Infrastructure Bonds

PFC 80CCF Infrastructure Bonds

PFC 80CCF Infrastructure Bonds

It’s a good thing that PFC infrastructure bonds have opened up so much ahead of time because it gives people enough time to subscribe to them and get the tax proofs well ahead of March 31st.

PFC is a good company, and the interest rates among these 80CCF bonds aren’t going to vary much as they are capped at the 10 year government bond yields, so I think people who are looking to invest in these bonds can give PFC a serious thought.

Last year, there were some news reports that LIC was going to offer these bonds with along with free life insurance and circumvent the cap on yields, but that never materialized.

I don’t know if any other company will try to pull something similar this year or not, but with just an investment of Rs. 20,000 in these – it will not make a lot of difference in absolute terms.

Views: 22606


Get free daily updates in your email:






{ 64 comments… read them below or add one }

Rahul October 4, 2011 at 10:19 am

Can somebaody explain me what does buyback means in terms of bonds? Also, will I get same interest in buyback. Buyback can be done any time after the lock-in period?

Reply

Manshu October 4, 2011 at 7:24 pm

It means that after 5 / 7 years – PFC may decide to redeem your bonds – you will get the interest and everything, and this will be exactly like redemption.

Reply

Rahul Jain October 4, 2011 at 7:28 pm

Thanks Manshu for your reply. “PFC may decide to redeem your bonds :”: May decide is like there are not 100% sure. Also, After 5/7 yrs, can I redeem on any day or is there some timeline?

Reply

Manshu October 4, 2011 at 7:44 pm

Thank you for asking that question – I should have elaborated that point more.

Yes, you do have an option to buyback as well, and after the lock in period there will be a notification period where you need to tell them whether to exercise the buyback or not. If you want them to exercise the buyback then they will redeem your bonds at that date, so in that sense the maturity becomes shorter than the 10 or 15 years.

Based on what I read the form should also have space for you to indicate whether you want to use the buyback facility or not, and if you indicate there that you do want the buyback to be affected then you don’t need to do anything later on, and your bonds will be redeemed during the buyback period.

So these guys are calling it a buyback facility which it really is since you as an investor have an option to choose whether you want to redeem your bonds earlier or keep it for the longer duration.

I hope this explanation is clearer – the early one was quick and didn’t cover as much details as it should have so thanks for asking the follow up question.

Reply

Rahul Jain October 4, 2011 at 7:51 pm

Thanks for nice and clear reply.

Reply

Manshu October 5, 2011 at 4:06 am

great – i’m glad it made sense.

Reply

mayank June 5, 2012 at 10:20 pm

is there a possibility to redeem d bonds before maturity if yes den how??

Reply

Shiv Kukreja June 5, 2012 at 11:39 pm

Hi Mayank… you cannot redeem these bonds before the lock-in period ends.

Reply

Sandriano October 4, 2011 at 1:36 pm

Hi Manshu,

Thanks for you post. It is helpful.
For benefit over and above 80C tax instrument (limit abov 1,00,000), which of the following is better for those in 20% and 30% tax bracket?

Option 1: Infrastructure bonds OR,
Option 2: Voluntary Provident Fund (over and above the 1,00,000 limit of 80C) which gives 9.5% interest rate.

One major difference (there are many) while calculating the returns is, that the first option has tax benefit but is taxed on interest earned while the option 2 does not have any tax benefit (since it is outside the 1,00,000 limit) but the returns are tax free.

Which is the best way to calculate the returns (post tax) between the above 2 options?

Regards,
Sandriano

Reply

Manshu October 4, 2011 at 7:26 pm

I will say upto 20K Infra bonds are better because you save a lot more tax as a result of reducing your taxable salary by 20K and saving about 20% or 30% on that so 4 – 6K.

Int difference of 1% on 20K is just 200 bucks, and tax on that at 20 or 30% is even less so infra bonds are better to the extent of 20K for sure.

After that it depends on a whole host of other factors as you say.

Reply

Rajat Gupta October 5, 2011 at 12:18 am

Thanks Manshu for your analysis and suggestion. Believe I will go for this investment.

Reply

Manshu October 5, 2011 at 4:06 am

Great – get all the proofs and everything in time, and file for it – I’ve seen a lot of people scampering for the tax proofs last time, and that’s always an irritating thing.

Reply

mithlesh October 6, 2011 at 12:50 pm

Haven’t seen any online broker offering it yet. IFCI is already there in their list. hope they put in PFC as well just to avoid any physical applications in case one wants to apply online.

Reply

Rajat Gupta October 7, 2011 at 7:06 am

Hdfc securities has this one online.

Reply

Gaurav Malik October 7, 2011 at 12:49 pm

One can buy IFCI Infra Bonds online on fundsindia.com

Reply

Karthik Reddy Chintaparthi October 8, 2011 at 11:48 am

Hi Manshu,

Thank you for the information. If I buy these through ICICIDirect, Do they charge us extra ? For the matter of fact, what is the advantage that we recieve if we buy them online than physical ? Please enlighten.

Cheers, Karthik

Reply

Manshu October 11, 2011 at 5:42 am

Hi Karthik,

I’m not sure what or if ICICI Direct charges any commission at all. The benefit of investing online is that it is in a Demat form along with your other securities so you don’t have to worry about paperwork, your interest will be credited to your account, and so will the redemption amount etc.

The drawback of doing it online is that the bonds will get locked in your Demat account, and if you want to close your Demat account before the maturity of these bonds then that is a huge hassle and I don’t even know if anyone has done that successfully or not.

Reply

Raju October 17, 2011 at 3:05 pm

Hello,

If i opt for paper form then where do i need to go to redeem this?
and
If i opt for demat form then what is the process to redeem this? Is it just like selling Shares online ?

Regards,

Reply

Manshu October 18, 2011 at 10:59 pm

Redemption will happen automatically – you don’t have to do anything extra for that. If you want to sell when it lists on an exchange then that will be done in the case of the Demat ones only. That will also be possible only after the lock in period is over so after about 5 years or so.

Reply

sudip October 11, 2011 at 8:58 am

can anybody help me in finding agents / selling points of this bond in KOLKATA ??

Reply

austere October 12, 2011 at 8:01 pm

Manshu– re your point regarding demat and bonds– this year I switched from a joint a/c to a single name a/c and with bonds there was a delay because the dp has to write to the co. for the transfer, but it got done.

Re PFC just downloaded the form from ICICIsecurities, paper submission as I have a ICICIdirect a/c but no internet banking *sheepish*.

Reply

Manshu October 13, 2011 at 5:14 am

No internet banking!?

Someone please remind me what year I am in! :-)

Reply

Rohit October 14, 2011 at 4:45 pm

will you please confirm who are the lead brokers in PFC Infrastructure Bonds – U/s 80CCF.

Reply

Manshu October 14, 2011 at 8:02 pm

SBI Capital Markets, Karvy, PNB Investment Services and ICICI Securities.

Reply

Ajit October 18, 2011 at 3:01 pm

Hi Manshu,

Are there any paper-based Infra bonds available in Market (or coming soon).
Is there anyway one can buy the same without having Demat account?

Cheers!

Reply

Manshu October 18, 2011 at 10:44 pm

Yeah, these bonds are both paper and demat, so you can buy even the PFC issue without a demat account.

Reply

Debarshi Manna October 19, 2011 at 12:36 pm

Hi I am deb I want to know how I able to invest in this bond & what is mean by buyback.

Reply

Manshu October 19, 2011 at 6:51 pm

Deb buyback means you can redeem the bonds for less time period than the maturity, and in a way this is just like maturity.

You can buy it from one of the centers close to your home or online if your broker has this option. You can also approach a financial adviser for this.

Reply

SumanRaghu October 20, 2011 at 4:53 pm

Hi ,

Please let me know where do I can buy the PFC Infra Bond in paper form in Mumbai
Does any bank selling physical copy of the bond? E.g., HDFC Bank

Thanks,
Suman

Reply

Shiv Kukreja November 3, 2011 at 9:44 am

Hi.. I think people who want to invest in Infrastructure Bonds should wait for a week to 10-15 days. IDFC, L&T, REC, PFS etc. are planning to come with their Infra Bonds offering in November and I’m quite confident that the Rate of Interest these cos. are going to offer would be 9%, as the 10-year Govt. bond yield has risen sharply close to 9% in October.

Reply

gurinder November 12, 2011 at 11:39 am

i want to by infra bonds for tax saving purpose plz tell me which bond is available

Reply

Shiv Kukreja November 14, 2011 at 10:30 am

Hi Gurinder.. IFCI Infra Bonds are available as of now but the issue closes today, so if you are in a hurry, speed up your acts to apply.

Reply

Ajit November 12, 2011 at 4:06 pm

Hello,

Can you please tell me simplest way to gain Paper-baesd (without DEMAT account) Infra bonds?

Reply

Manshu November 12, 2011 at 8:19 pm

Contact a bank or broker like Karvy near your house and see if they have it.

Reply

austere November 12, 2011 at 8:26 pm

I had gotten the form off the net from PFC’s site and submitted it via post to a collection center.
Stamped receipt received.
Filled in demat account details, so that’s that.

Reply

Manshu November 12, 2011 at 8:41 pm

Excellent! Way simpler than what I said – thanks for sharIng.

Reply

Vijay November 18, 2011 at 5:59 pm

Where can i check the allotment status !!! .. When it will be available ..

Reply

SANDEEP KUMAR November 22, 2011 at 3:27 pm

Sir,
I apply for PFC Infrastructure Bond. My application No. 14876858 and deduct amount by my account. But I have no any Information, No Bond in demat account, No any certificate, No any E-mail at my E-mail I.D. about above Bond.
Please inform me necessery information as soon as possible.
Thanking You,
Sandeep Kumar
S/O Sri Bankey Lal
295, Prabhudayal, Near Lal Kuan,
Jahangirabad (Bulandshahr) U.P. – 202394
Mob. 09456029018
E-mail – sandeepjpj@gmail.com

Reply

Manshu November 22, 2011 at 7:23 pm

Look you must understand that this is like a news website like Times of India. You need to contact whoever sold you the bond to get this information. Leaving comments here will not help.

Reply

Subi November 23, 2011 at 7:19 pm

Dear Manshu,
Thank you so much for providing such valuable info on you website.

I have few questions….would be great if you help-

1. If I take any bond like PFC (which sharekhan was not offering on their website though they are offering IFCI infra bond online) by filling up the physical form and provide demat a/c no in tyhe form …then will it get credited to my demat a/c automatically on allotment of the bonds??

2. When PFC infra bonds are getting alloted??

3. IDFC is giving 9% rate of interest….should I wait till Mar-12 to get other infra bonds having higher rate of interest??? If so …then when it is expected ???

Regards
Subi

Reply

Manshu November 23, 2011 at 9:48 pm

Dear Subi,

1. Yes, it will be credited to your Demat account.
2. Austere just left a note about that so I think you might have seen that about getting the allotment done today.
3. I don’t think the issues to come will have a much higher rate of interest maybe 0.25% – 0.50% higher and on 20k – that’s not much. I’ve seen that several people wait till very end and then find it difficult to get tax proofs and struggle with it. Ultimately it’s your decision if you want to wait or not but be cognizant of this factor.

Thanks.

Reply

subi November 24, 2011 at 12:59 am

Thanks a lot Manshu….. And yes I got the SMS from NSDL just after posting my query….

Regards
Subi

Reply

Manshu November 24, 2011 at 8:43 pm

That’s great! I appreciate your follow up comment.

Reply

austere November 23, 2011 at 7:33 pm

Just in– NSDL sms about PFC allotment in my demat account.

Checking the PFC site, I found list of bondholders of previous issues– fyi.

Reply

Manshu November 23, 2011 at 9:35 pm

That’s great to know – thanks a lot Austere!

Reply

bhaskar November 23, 2011 at 10:08 pm

Me too received sms from NSDL today regarding bond allotment.. I had applied for three bonds and got the same..

Reply

Guru December 5, 2011 at 1:07 pm

Got PFC physical bond certificate last week…:)

Reply

Manshu December 5, 2011 at 7:36 pm

That’s excellent – thanks for leaving a comment and letting everyone know here.

Reply

Himansu February 25, 2012 at 5:50 pm

Whether PFC has paid interest for the investments into bonds for FY 2010-11? I have not received any payment. And I could not get any details online & whom to contact to know the date of interest payment.
Please guide.

Reply

Bhavin November 15, 2012 at 4:04 pm

Even I am struggling to find out more about the interest payment. There is no information available online that I could find. I haven’t even received the allotment letter/advice either.

As per my understanding, the interest would be paid annually on the anniversary of the deemed date of allotment, which I think is 23rd November 2011 (the date on which the bonds were credited to my demat account) for this particular tranche.

So I am expecting the interest to be credited to my bank account by the end of this month. If anyone has more info, please add.

Thanks and regards,
Bhavin.

Reply

Shiv Kukreja November 15, 2012 at 4:44 pm
Bhavin November 15, 2012 at 5:04 pm

Thanks Shiv. I had read that post last month, but I was a bit unsure which PFC was mine since PFC was mentioned twice. (I assumed PFS was a typo and you meant PFC.) (And I should have mentioned this link in my above comment!)

What confounds me is why does the PFC website not have any information?!! I had also bought into PFC’s 2010 bonds and they sent me a very helpful allotment letter/advice then, so there is no confusion there… but no such letter for the Nov 2011 tranche. I didn’t bother contacting them for the letter since my demat account showed all the bonds duly present, so I thought let’s wait and watch. :-)

Cheers,
Bhavin.

Reply

Shiv Kukreja November 15, 2012 at 6:39 pm

You can get the allotment advice for your PFC Infra Bonds from this link –
http://karisma.karvy.com/investor/jsp/IDFC-APP.jsp

Last year’s PFC Infra Bonds are “Power Finance Corporation Ltd-Infra Bonds Tranche 1-2011″.

Reply

Bhavin November 17, 2012 at 9:04 am

Thanks Shiv, this is really helpful. :)
Cheers,
Bhavin

Reply

Shiv Kukreja November 17, 2012 at 6:46 pm

Great… Cheers !! :-)

Reply

neelam ratanjee April 2, 2012 at 10:40 am

i had subscribed to your Infrastructure Bonds Series 1 on 15.03.2005. i would like to know the status of the same and when can i encash it. what is the procedure to encash it. at present i am re3asiding in baroda.
please guide.
neelam

Reply

S Singh April 3, 2012 at 7:06 pm

When will PFC pay interest for the investments into bonds for FY 2010-11 ?
31March was the exact date of payments.

Regards,
S Singh

Reply

jiger July 26, 2012 at 9:24 am

sir can you inform me from where i can get live price of pfc bonds and and advice me if it is right time to buy

Reply

Shiv Kukreja July 26, 2012 at 5:30 pm

Hi jiger… you want the price of which PFC bonds – PFC Tax-Free Bonds or 80CCF Tax Saving Bonds ??

Reply

jiger August 22, 2012 at 10:39 am

yes

Reply

Shiv Kukreja August 22, 2012 at 10:57 am

PFC 80CCF tax saving bonds cant trade as there is a lock-in period of 5 years. PFC Tax-Free Bonds’ live price can be accessed from this link:

http://www.bseindia.com/bseplus/StockReach/StockQuote/Equity/830PFC2027/830PFC2027/961730/COMPANY

Reply

AHIWINI PATTNAIK September 3, 2012 at 10:24 am

Dear Sir,

I had applied for Infra bond in March 2011 for Rs.20000/- vide application no.2679823 but till date i have not get my Bond copy. Pl advice.

Reply

Bhavin November 15, 2012 at 4:06 pm

I think you should contact them on the address mentioned on this page:
http://www.pfcindia.com/Content/Bondholders.aspx

Reply

tkpaul August 21, 2014 at 2:55 pm

i lost my bonds certificate 2011-2012 issue. i donot have any record only application no 44912205
kindly let me to whom i will contact for getting duplicate certificate
tkpaul
durgapur

Reply

Leave a Comment

{ 1 trackback }

Previous post:

Next post: