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UPSC » Daily News Analysis ‘NABARD’s Deep-Discount Bond Approval’ : 14 June

Daily News Analysis ‘NABARD’s Deep-Discount Bond Approval’ : 14 June

Table of Content

What are Deep-Discount Zero-Coupon Bonds?

  • These bonds do not pay periodic interest and are redeemed at face value at maturity.
  • Maturity period: 10 years, 11 months, 13 days.
  • Issued at 20–25% discount to face value.
  • No interest payments during the term.
  • Suitable for long-term investors.
  • Eliminate reinvestment risk.
  • May offer tax efficiency under capital gains rules.

Significance:

  • Helps NABARD mobilize long-term funds for rural credit and development.
  • Offers investors duration lock-in and possible capital gains tax benefits.
  • Adds depth to India’s corporate bond market structure.

Why in News?

The government has approved NABARD to raise ₹19,500 crore through deep-discount zero-coupon bonds, maturing in nearly 11 years, by March 2027.