Industrial Credit and Investment Corporation of India (ICICI) is planning to a five year retail bond issue of Rs 300 crore and the interest rate targeted is in a band of 12 to 13.25 per cent.

This will be ICICIs first retail bond issue in the current financial year.

Industrial Development Bank of India (IDBI) had earlier raised funds in the current financial year at 13.5 per cent.

Market sources point out that the ICICI issue will be a pure retail issue with the brokerage structured to encourage retail subscription and discourage wholesale subscription.

It is pointed out that the retail issue is in response to a demand from the retail investors, who do not have investment avenues due to the current liquidity situation.

ICICI is planning three instruments. The regular income bond, a discount bond and a tax saving bond.

Market sources point out that the ICICI management will soon take a decision on the issue and file the draft prospectus with the Securities and Exchange Board of India (Sebi).

ICICI is targeting the retail investor with the sole purpose of building up a retail investor base.

Sources say that since ICICI can raise any amount from the wholesale market, a retail issue is not warranted.

However, as the wholesale market cannot be a sustained source of funding, ICICI is keen on creating a retail base.

Meanwhile ICICI shares rose Rs 3.50, or 4 per cent, to 91.75 at the Bombay Stock Exchange yesterday after the firm posted good first quarter results, traders said.

ICICI on Monday announced a net profit of Rs 223 crore in the three months to June 30, 1997 against Rs 100 crore in the year-ago period. The results came out after close of market hours.

"It's a good result," said JM's Kampani. Over 956,691 shares of ICICI were traded in morning trade. At the National Stock Exchange, ICICI shares were up Rs 2.50 at 91 with 386,200 shares changing hands.