REC Limited Raises Rs 5,000 Crore with Zero Coupon Bonds

REC Limited Raises Rs 5,000 Crore with Zero Coupon Bonds

REC Limited Raises Rs 5,000 Crore with Zero Coupon Bonds

New Delhi [India], October 1: REC Limited, a ‘Maharatna’ company under the Ministry of Power, has successfully raised Rs 5,000 crore through Zero Coupon Bonds (ZCB) at an effective yield of 6.25% per annum.

The bonds received a tremendous response, being oversubscribed seven times over the issue size. Rated AAA by four credit rating agencies, these bonds are issued at a deep discount and redeemed at face value. Investors benefit from lower taxation as the redemption is treated as long-term capital gain, taxed at 12.5% per annum.

This is the first issuance of CBDT notified zero coupon bonds by REC since fiscal 2010-11. The bonds will be listed on BSE and NSE.

REC, granted Maharatna status in 2022, finances a wide range of power infrastructure projects, including generation, transmission, distribution, renewable energy, and new technologies like electric vehicles and green hydrogen. Established in 1969, REC has also diversified into non-power infrastructure sectors such as roads, metro rail, airports, and educational institutions.

Doubts Revealed


REC Limited -: REC Limited is a company in India that helps fund projects related to electricity and other infrastructure. It is very important and is recognized by the government.

Maharatna -: Maharatna is a special status given by the Indian government to very large and important companies. It means the company is very big and successful.

Ministry of Power -: The Ministry of Power is a part of the Indian government that looks after electricity and power supply in the country.

Zero Coupon Bonds -: Zero Coupon Bonds are a type of loan where you don’t get interest payments regularly. Instead, you buy them at a lower price and get the full amount back later.

Rs 5,000 crore -: Rs 5,000 crore is a very large amount of money. One crore is 10 million, so 5,000 crore is 50 billion rupees.

6.25% annual yield -: 6.25% annual yield means that if you invest money, you will earn 6.25% more each year.

Oversubscribed -: Oversubscribed means that more people wanted to buy the bonds than were available. It shows that many people were interested.

AAA rating -: AAA rating is the highest rating given by credit rating agencies. It means the investment is very safe and reliable.

Credit rating agencies -: Credit rating agencies are companies that check how safe it is to invest in something. They give ratings like AAA to show how good the investment is.

Tax benefits -: Tax benefits mean you can save money on taxes by investing in these bonds.

BSE and NSE -: BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are places where people buy and sell shares and bonds in India.

Renewable energy -: Renewable energy comes from sources that don’t run out, like the sun, wind, and water. It is better for the environment.

Electric vehicles -: Electric vehicles are cars and other vehicles that run on electricity instead of petrol or diesel. They are better for the environment.

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