Infrastructure bonds are usually issued by the Government and infrastructure financing Companies, to raise funds for infrastructure projects. Whenever the Government is short of funds, it issues infrastructure bonds to finance these projects.
How do Infrastructure bonds work?
Infrastructure bonds are good for people who need a fixed income. They offer a decent rate of interest and tax benefits. The maturity of these bonds is often between 10 to 15 years with an option to buy-back after a lock-in of 5 years. These bonds are listed either on or both National Stock Exchange or Bombay Stock Exchange that provides you with an option to exit after the lock-in period. A Lock-in period is when you cannot sell a particular instrument.
Why invest in Infrastructure Bonds?
a. Decent Returns
which is a rapidly growing sector in our country.
b. Growth of Smart Cities
Infrastructure bonds have an exposure to smart cities.
c. Helps Government Projects
by 2020. Infra bonds help this cause.
d. Free Insurance
This is an added benefit along with the interest you get.