Icici Steps Up Bond Rates War With Idbi

The interest rate war between the financial institutions has intensified, with ICICI deciding to offer higher yields on its retail bonds than IDBIs Flexibonds series 3.

ICICI will offer 14% for its five year regular income bond, against the 13.25% being offered by IDBI for the same tenure, sources said.

ICICIs tax-saving scheme is also offering higher returns than IDBIs scheme. While ICICI is offering 12.75% and 13.25% for three and seven years, IDBI is offering 12.25% for three years and 12.5% for seven years.

ICICIs money multiplier offers Rs 1 lakh after 25 years, on an initial investment of Rs 4,000. Sources said the FI would enter the market before the end of this fiscal and would provide a market-making facility for investors.

 

Both the three- and five-year tax-saving bonds will be eligible for benefits under section 88. The three-year bond will also get benefits under section 54 EA, which provides investors with a capital gains shelter for both the principal and subsequent gains. The seven-year bond will offer investors the benefit of section 54 EB, under which capital gains from another market can be invested in these bonds without any tax being paid.