Muthoot Finance has recently launched an issue of redeemable non-convertible debentures. The issue opened on May 25 and will remain open till June 17.
This is a public issue of secured redeemable non-convertible debentures of base size of ₹75 crore with an option to retain oversubscription up to ₹225 crore aggregating up to tranche-II issue limit of ₹300 crore.
The NCDs are proposed to be listed on the BSE. The allotment will be on first come first serve basis. There are seven investment options with ‘monthly’ or ‘annual’ interest payment frequency or ‘on maturity redemption’ payment with coupon ranging from 7.25 percent per annum to 8 per annum, the company said in a statement.
The interest rate varies from tenor to duration of interest payment. When the interest payment is annual, rate of interest is 7.5 percent per annum for 36 months, 7.75 percent per annum for 60 months, and 8 percent per annum for 84 months.
At the same time, in case of monthly interest payment option, the rate of interest is 7.25 percent for 36 months and 7.5 percent for 60 months.
| Tenor | Interest (%) (annual) | Interest (%) (monthly) |
| 36 months | 7.5 | 7.25 |
| 60 months | 7.75 | 7.5 |
| 84 months | 8 | -- |
On maturity, an amount of ₹one lakh will grow to become ₹1,24,230 after 36 months, and ₹1,45,240 after 60 months.
Financial advisors often advice their clients to look at the credit rating of the issue. In this case, the rating is AA+ by ICRA which denotes 'high degree of safety regarding timely servicing of financial obligations and carry very low credit risk'.
Investors can make the application only through ASBA (Application Supported by Blocked Amount) as no cash or cheque is accepted for the issue.
George Alexander Muthoot, managing director, Muthoot Finance, said, “We have allocated 90% of the issue for retail and high net-worth individual investors who will be getting 0.50% p.a more than the interest rate applicable for institutions and corporates. Moreover, interest rates have been increased by 0.25% p.a. in this issue compared to the previous issue."
FDs rates offered by banks
It is noteworthy to mention that banks and NBFCs have been raising interest rates for some time now. Last month, South Indian Bank raised its fixed deposit interest rates which are now as high as 6 percent for long tenor deposits. This was followed by Bajaj Finance raising its interest rates. Bajaj Finance also raised its term deposit rates, with effect from April 25.
The State Bank of India (SBI) also raised interest rates on long-term fixed deposits (FDs) by up to 15 basis points (bps) with effect from February 15.
HDFC Bank also announced a hike in interest rates on fixed deposit (FD) with effect from February 14. And it was the second time in two months when HDFC Bank raised the interest rates as the private lender, in January, also raised its interest rates by five to ten basis points.
