Infrastructure bonds are usually issued by the Government and infrastructure financing Companies, to raise funds for infrastructure projects. Whenever the Government is short of funds, it issues infrastructure bonds to finance these projects.
You can apply online to invest in an infrastructure bond, if you have a demat account. You have to fill up the online application form.
You require a demat account and a PAN to trade in infrastructure bonds.
You can apply for these bonds in the physical form. You require a self attested PAN card. You need to have identity and address proof as part of the KYC (Know Your Customer), procedure.
These bonds have a maturity period of 10 years and a lock in period of 5 years.
These bonds can be traded on stock exchanges just like stocks, after the expiry of the lock in period.
The interest earned on an infrastructure bond is taxable.
You get a decent rate of interest. This is because infra bonds invest in infrastructure, which is a rapidly growing sector in our country.
The Government is funding the growth of 100 smart cities in the country. Infrastructure bonds have an exposure to smart cities.
The Government has launched ambitious projects, such as affordable housing for all by 2020. Infra bonds help this cause.
If you purchase infra bonds from certain firms, you get free insurance. This is an added benefit along with the interest you get.
If you are an Indian resident or a HUF, you can invest in the infrastructure bond. NRI's cannot invest in infrastructure bonds. These bonds have a minimum investment amount of INR 5000 and thereafter in multiples of INR 5000.
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