NEW DELHI, January 30: Merchant bankers and brokers have stolen a march over IDBI in hard-selling Flexibond III. While the Mumbai-based institution has hiked the coupon rate to ensure a smooth sailing for its bond issue, several Delhi-based brokers have gone a step further by offering high incentives to entice the retail investor. The cash incentives range from 1-3 per cent of the investible amount to an on-the-spot payment of Rs 100-150 per application form.In the offer document, IDBI has declared it will pay a fixed brokerage of Rs 25 per application and 1.25 per cent on an investment up to Rs 5 lakh. So, it is obvious that these brokers are paying out of their pockets in order to grab customers and stay in the good books of IDBI. In its advertisement, Aar Ess Investment, declares that it is offering a high incentive of 1 per cent on every Flexibond III application. B D Aggarwal & Company goes a step further by offering 3 per cent cash incentive per application. Similarly, Hexagon Consultants isoffering 1 per cent incentive at the time of application or 1.25 per cent on allotment. VMR Investments is giving 1 per cent incentive plus Rs 30 per application.
These incentives are apart from the aggressive campaign being launched by the marketeers. Hoardings in petrol pumps, advertisements on the rear end of state buses not to mention police pickets and the freebies being doled out to all and sundry.
After the hike in bank rate, IDBI was compelled to revise the coupon on two schemes -- Regular Income Bond-98 and Growing Interest Bond-98. Lead managed by SBI Capital Market, Enam Financial and Kotak Mahindra, the issue opened on January 23 as scheduled earlier. The Flexibonds-III (with a AAA rating from both Crisil and Care) offers four investment options -- Infrastructure Bond, Regular Income Bond, Growing Interest Bond and Deep Discount Bond.
IDBI Growing Interest Bond offers 11 per cent for the first year, 11.5 per cent for second year, 13 per cent for the third year, 15.25 per cent for the fourthyear and 18 per cent for fifth year on a minimum investment of Rs 5,000. Investors in this scheme have early exit option at the end of every year. The Regular Income Bond (with a face value of Rs 5000) have a coupon of 12.50 per cent payable monthly or 13.25 per cent payable annually. The bonds will mature at the end of five years from the date of allotment.
The infrastructure bonds (minimum investment Rs 5000) carry an interest of 12.5 per cent payable annually. Investments in this bonds will be eligible for tax benefits under Section 88 or Section 54EA or 54EB. In order to make the infrastructure bonds attractive, subscribers to these bonds will have priority over other bond subscribers for allotment.
The deep discount bonds are at a discounted price of Rs 12,750 and after the maturity of 30 years, the bonds will be redeemed at its face value of Rs 5 lakh. The investors will also have the option of early redemption starting from the end of five years and till the end of 25 years.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
