Posing a new threat to banks, which are already struggling with poor deposits growth,
hundreds of investors are breaking their tradition of saving in bank fixed deposits to invest in tax-free bonds from State-run companies. High yields, being offered by the tax-free bonds are attracting the investors.
The bonds sold by NTPC and Housing and Urban Development Corp are nearly three percentage points more than fixed deposits and this has made them attractive investments for pension days. The returns are so attractive that NTPC’s bonds with 8.91 per cent yield were sold out on first day of the issue’s opening.
India Infrastructure Finance Company and other such companies are set to offer tax-free bonds.
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