Personal Finance Blog India –

DHFL NCD Issue August 2016:

DHFL – Dewan Housing finance Limited – second largest private sector housing finance company has come with Secured, NCD issue with face value of Rs.1000 each & issue size aggregating up to Rs.1000 crore, with option to retain over subscription up to 4000 crore limit.

Company may issue NCDs in one or more tranches.

DHFL was established in 1984 with an objective to provide housing loan assistance to low – medium income group.

DHFL has also presence in Life insurance & Asset management with joint venture partner Pramerica (Prudential of America)

Details of DHFL NCD issue are as follows:

Imp Dates:

  1. Issue open date: Aug 03, 2016.
  2. Issue close date:Aug 16, 2016

Different category of investors like – Institutional investors,Corporates,HNIs,Retail individual investors are eligible to apply.

  • High Networth Individuals: Applying for more than Rs.10 Lakh aggregating across all series.

Here we will consider coupon rates for Individual / HNI investors :

Interest rates FOR INDIVIDUAL INVESTORS (Retail / HNI):

Coupon rates depends on tenure of NCDs and interest payment frequency.

Monthly Interest payment:

Interest will be paid monthly.


Annual interest payment:


Cumulative option:

Principal and cumulative interest to be paid at the end of tenure.


Floating rate option:

For tenure of 03 yrs, floating rate option based on CPI – consumer price inflation is available for investor.Retail / HNI Investor will get spread of 4.18% above CPI and interest will be paid annually.


Reference CPI will be avg of last 12 months.So interest will reset annually.


Interest payment for Non Cumulative option will be on actual basis and one can use following formula to calculate expected interest:

Interest on NCD for Non-Cumulative mode

= (NCDs allotted) X (Face Value) X (Interest Rate/100) X (No of Days)/366


Other issue details:

  1. Credit Rating :CARE AAA & BWR AAA indicates stable issue & highest safety.
  2. Listing : Both @ BSE & NSE.
  3. No call or put option : Neither company not investor will able to redeem NCDs before tenure.But investors holding NCDs in demat mode can sell in secondary market.
  4. Allotment is on first come first served basis.30% of issue size is reserved for retail individual investor – not applying for more than 10 Lakh & 30% for HNIs i.e. applying for more than Rs. 10 Lakh.
  5. Min application amount: Rs.10,000/-
  6. Security :Issue will be secured for both principal and interest thereon.Minimum security cover of 1.1 times of principal & interest  will be maintained.

Profit after tax / financials of DHFL :





Should you invest in DHFL NCD:

Company has shown robust growth in profits since last few yrs.As well considering highest credit rating and secured nature of issue investor can invest some part of fixed income portfolio in this issue.We are in falling rate scenario and interest rate of around 9.20% can be considered as good interest in this environment.

How To Track Target of Rs.1 Crore In Next 15 Yrs:

Ramesh has recently started for saving & investing.For now,he has kept target of Rs. 1 cr within next 15 years.

We will prepare a  flow of valuation on annual basis with some assumptions so that he can track his progress of investment and benchmark his saving & investment against this value on annual basis.

Here we have made assumptions:

  1. Monthly saving & investment: Rs.30,000/-
  2. Net interest rate assumed: 8%.
  3. Compounding Frequency : Annually.

If you are expecting higher or lower rate then for required monthly investment you can refer:

What Should You Invest Per Month To Get The Target Of Rs.1 Crore:

Then target corpus of Rs.1 Crore will be reached in following way.


One crore target in 15 yrs

  1. To track the progress of investment,compare valuation with this table.E.g if you have completed 4 yrs and have same goal then if your valuation is around 17 L or more then consider that you are on right track.
  2. If you are lagging in valuation then try to save more next year & try to fill up gap as early as possible.
  3. In case of equity,growth won’t be linear in this way.If lagging, try to cover the gap with some top up investment.
  4. Even though you have irregular cash flow & its not possible for you to invest systematically, use expected value to compare with current valuation.
  5. Consider liquid assets only which can be easily sell out in market like Fixed deposits,mutual funds,shares etc.
  6. If you have different goal in your mind then convert values proportionately.

Sovereign Gold Bonds F.Y.2016-2017 – July2016- Series 1

Reserve Bank Of India on behalf on Govt Of India will issue first series ( Tranche IV )of Gold bonds in financial year 2016-2017.This Gold bond issue will open on July 18, 2016.


Gold Bonds July 2016

Features of Gold bonds are as follows:

  1. Issue open date: July 18, 2016.
  2. Issue close date: July 22, 2016.
  3. Issue Price: INR.3119 per Gram of Gold.
  4. Tenure:Tenure is 8 yrs but there will be exit option from 5th year which can be exercised on interest payment date.
  5. Minimum size: 1 unit (Gram) of gold & in multiples of 1 Gram thereafter.
  6. Maximum size : 500 Grams per individual in financial year.
  7. Interest rate:Fixed rate of 2.75% p.a. payable semi-annually on initial value of investment.
  8. Redemption value:Redemption price will be in INR based on previous weeks simple average of closing price of Gold of 999 purity published by IBJA – Indian Bullion & Jewelers Association.
  9. Taxation:Interest received semi-annually will be taxable.Capital Gains arising on redemption of Gold bonds has been exempted.On transfer of bonds,indexation benefit will be provided to long term capital gains.
  10. Collateral : Gold bonds can be used as collateral for loans.Loan to Value ration will be as mandated by RBI time to time.
  11. Tradability : Gold bonds are tradable at exchanges from date notified by RBI.
  12. There is no physical Gold involved in entire process.Redemption value will be in terms of INR.

How to apply for Gold Bonds:

Investor along with KYC document can visit banks,post office or stock broker for application form.If in past you have invested in Gold bonds,then you will need to enter RBI investor ID.

Should you invest in Gold bonds?

Its impossible for any one to guess Gold prices after 5+ years as its function of both core prices & currency.But,Gold bonds can be preferred over physical gold.If requirement of physical gold is after 5+ years then consider investing in gold bonds.Investor will get interest as well there won’t be any storage risk.

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