Bank Deposit

GOOD TO GO

Sandeep Singh
Posted online: Monday , October 08, 2007 at 1506 IST

For the retired and the elderly looking for a regular income, here’s another worthy investment option: ICICI Regular Income Bonds. The bank is offering four investment options: annual and monthly interest payouts for a tenure of five years and three months, and for 10 years. The standout option is monthly payout for 10 years, on which the bank is offering an interest rate of 9.57 per cent. Illustratively, an investment of Rs 10 lakh will give a monthly interest of Rs 9,570.

Several banks, ICICI included, are offering 10 per cent on their fixed deposits, but that’s generally for tenures of up to five years. ICICI’s Regular Income Bonds are offering that rate over 10 years. Given that interest rates might be near their peaks, those are top terms to lock into today for the best part of your fixed-income portfolio (See table: The peer comparison).
These bonds also insulate senior citizens from certain other inconveniences they face in other fixed-income avenues. ICICI will deduct TDS of 11.3 per cent, but it will conform to the government-mandated easier norms for senior citizens (those over 65 years). Interest income up to Rs 10,000 per year won’t invite any TDS. Even if it’s over Rs 10,000, senior citizens can stop the bank from deducting tax by submitting Form 15H.
This issue closes on Friday. ICICI has set the issue size at Rs 500 crore, with the option to retain another Rs 500 crore. In case of oversubscription, the allotment will be on a pro-rata basis. Further, 70 per cent of the issue is earmarked for those applying for 50 bonds or less. The bonds, which don’t have any lock-in, will be listed on the BSE and NSE, giving investors another exit option.

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