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NABARD Bonds
Who Issued Bond
Bhavishya Nirman Bonds which are issued by NABARD
How to Invest in Bond
These bonds can be held in demat form also making it easy for investors to
liquidate their holdings, as these bonds are listed on BSE.
Issued Price
These bonds are issued at a price of Rs.8500 and redeemable after 10 years at
Rs.20000. There is no money flow during this period. Return of Rs.11500 in
10 years on an investment of Rs.8500.
Rate of Return
The simple rate of return on these bonds works out to be 12.18% (as
advertised by NABARD), however the compounded rate of return is 8.93%
post-tax better than best available PSU Bank FD rates of 10.5% for investors
in highest income tax bracket.
Advantage and Disadvantage
However, there are certain issues to be considered before making investment.
Firstly, FDs are highly liquid while these bonds have a 10 year lock in which
is quite a long period. Even by selling these bonds on BSE, the returns would
be much less than anticipated.
Secondly, the post tax return is as per current Income Tax Laws. It is very
uncertain as to what will be the Capital Gains tax rates after 10 years, as the
taxation liability would be according to the prevailing tax laws in that
financial year.

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