A Bond is a loan given by the buyer to
the issuer of the instrument. Bonds can be issued by companies, financial
institutions, or even the government. Over and above the scheduled interest
payments as and when applicable, the holder of a bond is entitled to receive the
par value of the instrument at the specified maturity date.
Bonds can be broadly classified into :
(a) Tax-Saving Bonds : Tax-Saving Bonds offer tax exemption up to a specified amount of investment. Examples are:-
(a) ICICI Infrastructure Bonds under Section 88 of the Income Tax Act, 1961
(b) NABARD/ NHAI/REC Bonds under Section 54EC of the Income Tax Act, 1961
(c) RBI Tax Relief Bonds
(b) Regular Income Bonds : Regular-Income Bonds, as the name
suggests, are meant to provide a stable source of income at regular,
pre-determined intervals. Examples are :-
(a) Double Your Money Bond
(b) Step-Up Interest Bond
(c) Retirement Bond
(d) Encash Bond
(e) Education Bonds
(f) Money Multiplier Bonds/Deep Discount Bond
(b) Step-Up Interest Bond
(c) Retirement Bond
(d) Encash Bond
(e) Education Bonds
(f) Money Multiplier Bonds/Deep Discount Bond
Similar instruments issued by
companies are called debentures.
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Credit Rating Symbols and What
They Mean
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High Investment Grades
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AAA
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Highest Safety
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AA
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High Safety
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Investment Grades
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A
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Adequate Safety
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BBB
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Moderate Safety
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Speculative Grades
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BB
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Inadequate Safety
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B
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High Risk
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C
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Substantial Risk
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D
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In
Default
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