NHB increases coupon rates on its Capital Gains Bonds

NHB increases coupon rates on its Capital Gains Bonds : December 1, 2004

NHB INCREASES RATES OF INTEREST ON CAPITAL GAINS BONDS

(Issued under Section 54-EC of the Income Tax Act, 1961)

The rates of interest on National Housing Banks Capital Gains Bonds Issue, 2002 are being increased with effect from December 1, 2004 as under:

Period	Rate of Interest
Period	Existing	Revised
For 5 year tenor with put/call option at the end of 3 years For amounts upto Rs.1 crore	5.10%	5.35%
For 5 year tenor with put/call option at the end of 3 years For amounts of Rs.1 crore & above	5.10%	5.45%
For 7 year tenor with put/call option at the end of 5 years	5.25%	5.50%

The Bonds are rated AAA with stable outlook, from CRISIL.

NHB offers a choice of two different structures of its Capital Gains Bonds. One structure has a tenor of 5 years with put and call option at the end of 3rd year, a coupon of 5.35 % per annum for amounts up to Rs.1 crore and carrying a higher coupon of 5.45% per annum for amounts of Rs.1 crore and above. The second structure has a tenor of 7 years with put and call option at the end of 5th year and carries an interest rate of 5.50% per annum. Investors can opt for receiving interest payment on the Bonds either annually on 1st April each year or cumulatively on maturity. The minimum amount of subscription is Rs.10,000/- and further amounts can be invested in multiples thereof. The Bonds are on tap and NHB reserves the right to suspend/close the Issue at any time. The Bond is not transferable; non-negotiable and cannot be offered as security for availing loan or advance. The Central Board of Direct Taxes has extended the benefit of Section 193 (ii b) of the Income-tax Act 1961 to the investment in NHB’s Bonds, in terms of which no Income-tax will be deducted at source on the interest.

National Housing Bank’s Capital Gains Bonds Issue 2002 which opened for subscription in August 2002 has received overwhelming support from individuals, banks and institutions who have invested in the Bonds. In all, the aggregate amount of subscription received so far is over Rs.5,500 crores.

NHB’s financials have consistently been strong. Highlights of the performance as on June 30, 2004 are as under:

Total refinance and project finance outstanding as at June 30, 2004 was Rs.8,284.00 crores. Total assets portfolio was Rs.13,107.51 crores; net non performing assets continues to be NIL while the profit before tax was Rs.155.64 crores. Outstanding borrowings were Rs.10,569.29 crores. NHB’s share capital of Rs.450 crores is entirely subscribed by the Reserve Bank of India. The net owned fund was Rs.1,656.78 crores and its capital adequacy ratio was 30.05% as on 30.6.2004.