NHB - Tax Free Bonds

By Research Desk
about 9 years ago
NHB - Tax Free Bonds

National Housing Bank (NHB), country’s housing finance regulator wholly owned by RBI and providing support to housing finance institutions, has entered the debt capital market on 11th March 2013,  with an issue of Tax Free Bonds of face value of Rs.10,000 each, in the nature of Secured Redeemable Non Convertible Debentures. This Rs. 3,750 crore, closing on 15th March, is rated AAA by CRISIL and CARE, and will be listed on NSE.


The current bonds are being offered under a single series with features as under:-





10 Years

Frequency of Interest Payment


Minimum Application Size

Rs.10,000 (1 bond)

In Multilpes of

Rs.10,000 (1 bond)

Face Value (Rs/Bond)


Issue Price (Rs/Bond)


Coupon Rate (%) p.a.

  • For retail investors*

7.32% p.a.

  • Other than retail investors

6.82% p.a.

Put / call Option


*Individuals and HUFs can apply for a maximum of Rs. 10 lakh


Bonds are to be issued both in physical and dematerialized form, hence a demat account is not necessary to buy these bonds. Also, the bonds do not have any lock-in period.


These bonds are comparable to 10.59% pre-tax return earned on other fixed income instruments, assuming the highest tax bracket of 30.9% for retail individuals, which is not very attractive vis-a-vis HUDCO bonds which are currently open for subscription. Moreover, the tenure is also lower at 10 years, as against 15 years for host of other offerings currently open.  


Both NHB and JNPT bonds are identical in their pricing, coupon rate and tenure. On account of poor coupon rates, one can give this issue a miss!

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