For the first time, deep discount bond -- a long-term debt instrument pioneered by the country's premier term-lending institution -- will not be on offer. The Flexibond 4 will consist of four types of unsecured redeemable bonds: IDBI regular income bond, IDBI growing interest bond, IDBI infrastructure bond and IDBI education bond.

Coupons for the four instruments are being worked out. "We are also taking a final look at the size of the issue. The core size can vary between Rs 500 crore and Rs 750 crore carrying a 100 per cent greenshoe option," IDBI sources said.

The proposed public issue will be a part of the term-lending institution's Rs 5000 crore annual resource raising plan through public issues for the fiscal 1999. It has already received the Securities & ExchangeBoard of India's (SEBI) clearance for its umbrella prospectus for raising Rs 5,000 crore -- through 20 instruments -- in a number of tranches over the year.

IDBI has so far raised about Rs 4,000 crore through the private placement route with the latest Omni Bond issue -- which hit the market in June --mopping up about Rs 1300 crore.

Coupons offered on the current issue, being privately placed, are as follows: 14 per cent on seven-year paper, 13.75 per cent on five-year paper, 13.25 per cent on three-year paper and 12.5 per cent on one-year paper.

The minimum investment in four instruments of the proposed Flexibond 4 issue is pegged at Rs 5000 and the institution has decided against keeping any call option in any of these institution. These bonds have been structured with several investor-friendly features to meet the needs of different types of investors.

An investor with a minimum investment of Rs 5,000 in IDBI education bond will receive an equal annual payment for five years after a predeterminedwait period. This annual payment will be in form of an annuity consisting of principal and interest and amounts will vary depending on the wait period chosen.

The investor can opt five year or seven year or nine year wait period. After the chosen wait period, the interest and principal will be repaid in five years through five equal annuity payments.

The investors in IDBI regular bond with a minimum investment of Rs 5000 will receive interest either monthly or annually for period of five years. The IDBI growing interest bond will step up the interest rate -- payable annually -- every year with the maximum being paid in the fifth year. Essentially this will be a flexible maturity bond where investors will have the option to withdraw the investment after every year after the end of first year or continue year after year and get a progressively higher interest rate.

The IDBI infrastructure bond will be eligible for exemption from the capital gains tax under section 54EA or section 54 EB of the Income TaxAct 1961. The investors can claim benefit under either of the sections. The instrument will have five-year and seven-year maturity period with a facility to redeem at the end of third and fifth year.