Personal Finance Blog India –

Interest On Application And Refund Money:

Today,season of NCDs and tax saving infrastructure bonds is on.Normal procedure is that first investor needs to apply  and bonds are alloted as per response to the issue.Application money remains with the issuers account from date of application of investor till allotment date.. if investor do not get allotment then money is refunded to the investor.There is no uniform rule about interest on application and refund money.Here is comparision of interest rates offered by latest issue :

Issue Interest Rate on Application /Refund Money
PFC 4.5% per annum on application money & 4% pa on Refund money
IFCI Interest rate similar to the issue for corresponding period
Muthoot Finance 8% per annum.
REC Interest rate similar to the issue.


E.g:If anyone have applied for IFCI tax saving series-3 issue on 12th Oct 2011 then investor have received the interest for period of 60 days (from 12th Oct to allotment date -12 th Dec)..with interest rate of 8.5% p.a.and it will be approximately Rs.280.

There are few issues which do not offer interest on application money..Isn’t it¬†unethical ? what do you think?

Category: Fixed Income


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