- I am holding DDBs.What steps am I required to take to get redemption proceeds?
You are required to furnish documents such as (1) application
for redemption and (2) duly discharged bond certificate
as also Form 15 H (in duplicate) and other attested certificates
where ever applicable to either the registrars or any of
the offices of IDBI or IDBI Bank Ltd. by post or by hand
delivery by December 31, 2001.
- How do I receive the payment?
The payment (redemption proceeds ) would be made by means
of a warrant drawn in favour of the first holder. Warrants
would be sent by post.
- How does one apply for redemption?
Redemption application, addressed to the registrars or
IDBI, can be made on a plain paper or in the prescribed
Redemption Application Form (RAF). Write a simple application
saying " I understand that IDBI has decided to redeem the
DDBs. I am enclosing --- Nos duly discharged bonds and other
documents (wherever applicable). Please pay redemption proceeds
to me". In the application indicate your full address with
PIN CODE, Bank account details of the first holder (a/c
no, name of bank, branch and address) , and PAN/GIR No.
Also give your telephone no and e-mail id etc for faster
communication. This application will have to be signed by
all the bondholders. Please quote the folio no in your application
as also on all the documents sent along with the application.
If you are furnishing your application by hand delivery
ensure to send an extra copy of application. This will be
duly acknowledged and returned to you for your record. In
the RAF acknowledgement slip has been provided.
- What are these Redemption Application Forms (RAFs)?
The RAFs have been printed for the benefit of investors.
These pre-printed forms are sent to all the investors along
with the Call Option notice. RAFs contain most of the information
that needs to be furnished by the investor. Thus, it is
advisable to use the RAFs instead of applying on a plain
paper. In case the RAF received by you is torn/ mutilated,
you can collect the RAFs from any of the offices of IDBI/
IDBI Bank Ltd or the Registrars. RAFs can be downloaded
from IDBI web site also.
- I am holding a number of DDBs. How many applications should
I send?
As the applications are processed Folio wise, a separate
application/ set of documents needs to be furnished for
each folio. Thus, as long as the folio No is the same send
only one application (even if there are a number of certificates
under the same folio).
- How do I discharge the bond certificate?
Affix Re 1/- revenue stamp on the back side of the bond
certificate at any convenient place. First holder to sign
across the revenue stamp and second and third holders, if
any, to sign just below that (they need not sign on revenue
stamp). In case the first holder is a minor then the guardian
should sign on minor's behalf. Similarly in case your signature
has changed over a period of time kindly get the same attested.
- The DDBs are held in the name of minor. What should we
do?
Guardian would send the application/ discharge the DDBs
on behalf of the minor. He will be required to sign again
if he happens to be second / third holder.
- How will the payment be made?
The redemption warrant would be issued in the name of
the first holder. Hence it is necessary to open a bank account
in the name of the minor first holder. These bank details
to be furnished in your application for redemption.
- What are the Tax implications if the first holder is a
minor ?
In such cases the redemption proceeds would be taxable
if the income of the guardian is taxable.
- At the time of purchase of DDBs I was a minor. Now I have
become a major.
How do I go about it ?
Enclose a duly attested xerox copy of your birth certificate
confirming that you have become a major. The bond certificate
would also be discharged by you as a major. As your signature
is not on our records you will have to get it attested by
authorised officials.
- Now I am married and my name has been changed after marriage.
Procedure would be same as above. Attach attested xerox
copy of marriage certificate. Your signature, if changed,
would need attestation too.
- The first holder has expired. I am the second holder.
You have to attach attested copy of death certificate
of the first holder. You would be discharging the bond certificates.
Other procedure would be same.
- First holder has expired. There are no other holders.
In such cases the nominee would be eligible to receive
the redemption proceeds. However, if nominee has not been
indicated then the executors or administrators of the deceased
sole holder of the bond (whether Hindu, Mohammedan, Parsi
or otherwise) or the holder of the succession certificate
issued under Part X of the Indian Succession Act, 1925 (39
of 1925) in respect of the bond shall be the only person
(s) who may be recognised by IDBI as having title to the
bond. Notwithstanding anything contained in Section 45 of
the Indian Contract Act 1872 (9 of 1872), in case of a bond
issued, sold or held payable to two or more holders, the
survivor(s) and on the death of last survivor, his executors,
administrators or any person who is the holder of the succession
certificate in respect of such bond shall be the only person
who may be recognised to have a title to the bond.
- Are the redemption proceeds taxable?
Yes. The interest earned on these bonds is taxable. Redemption
amount would be paid to all the bondholders after necessary
tax adjustment/ payment/ deduction as applicable under Income
Tax act 1961. As regards tax treatment the Central Board
of Direct Taxes has, vide letters dated 12.3.1996 and 26.3.1998,
clarified that " the difference between the issue price
and the redemption price of Deep Discount Bonds will be
treated as interest income, assessable under Incone Tax
Act, 1961. On transfer of bonds before maturity, the difference
between sales consideration and the issue price will be
treated as capital gain/loss if the assessee purchased them
by way of investment. However, in case of an assessee who
deals in purchase and sale of bonds, securities etc., the
profit and loss shall be treated as trading profit or loss."
TDS would be deducted on the interest component of Rs 9,300/-
per bond (i.e. Rs 12,000/- less Rs 2,700/-) presently at
10.2% for individuals/ HUF and at 20.4% in case of Corporates.
- My income is not taxable. How can I claim exemption?
Submit Form 15 H duly filled in (in duplicate) to get
exemption from Tax deduction.
- How do I fill in form 15H ?
These forms can be collected from IDBI. Quote folio no
in the space provided in the Form. Complete other details
such as name, address, Table III (tables I and II are not
applicable), occupation etc.You are required to sign at
two places marked in the form.
- Will I get TDS certificate?
Yes! TDS certificate in Form 16A will be printed on the
back side of the counterfoil attached to the redemption
warrant posted to you. The counterfoil would also provide
details such as principal amount, interest, Tax deducted
etc.
Certificates/signatures shall be attested under their seal/
stamp either by Judicial Magistrate or SEM or Notary public
or Gazetted Officer or officer of IDBI or officer from any
Public Sector Bank, Scheduled Commercial Bank, Scheduled
Co-operative Bank or Officer from IDBI Bank Ltd.
- I am an NRI bond holder. What should I do?
Procedure to be followed is the same as in normal case.
But NRI investors will have to indicate clearly in the application
their NRI status. Further, RBI has granted permission for
these bonds only on non-repatriable basis. Investors will
have to furnish a mandate for crediting the proceeds of
the bonds to their NRO bank account held in India (give
full details of branch, address etc). Alternatively, the
warrant would be dispatched to their address in India. NRIs
to furnish residential address (with PIN Code) in India.
e mail address/ tel no would be useful for faster communication.
- I am holder of DDBs but my bond certificate is misplaced/
lost.
What should I do?
You will have to submit an indemnity on requisite stamp
paper and apply for duplicate bond certificate (Draft of
indemnity can be obtained from the registrars or any of
the offices of IDBI). Duplicate bonds are normally issued
within about one month of receipt of the indemnity. After
a duplicate bond is issued the earlier certificate is cancelled.
Even if it is traced at a later date only the duplicate
certificate will be recognised by IDBI/ registrars.
- I had submitted all the papers well in time but I have
not received the
redemption warrant.
This might happen for various reasons such as (a) RAF/bonds
not received by registrars at all and lost in transit, (b)
your application is placed under objection as the signatures
are not matching with our records, (c) necessary attested
supporting documents not submitted etc. In case of (b) and
(c) you will get intimation to that effect. Warrants/ letters
sent by registrars/ IDBI can get lost in the transit. In
case you do not get the redemption warrant within a reasonable
time it could be because of any of the above reasons. Immediately
get in touch with either the registrars / IDBI to sort out
the issue.
- There is a mistake in the redemption warrant received
by me.
In such cases hand over the warrants at any of the offices
of IDBI or send them by post to the registrars/ IDBI for
necessary corrections.
- Why IDBI has decided to exercise Call Option and close
the DDBs Scheme?
In terms of the offer document dated 15.1.1992 investors
have an early redemption option (Put Option) & IDBI has
Call Option for earlier closure of the bonds on pre-designated
dates. The DDBs carry an interest rate of about 15% p.a.
whereas interest rates have since fallen & incremental funds
can now be raised in the market at a much lower rate of
about 10% p.a. . IDBI has decided to repay high cost funds.
- Investors were not aware of the provision of Call Option
when they decided
to invest in DDBs in 1992?
A mention of Call Option was made in the offer document
dated January 15, 1992 as also on the face of Bond certificates.
- Is the Call Option binding on all the investors in DDBs
?
Yes ! By exercising the Call Option in terms of offer
document date 15.1.1992 IDBI has decided to close the scheme
and redeem the DDBs. Thus, the Call Option is binding on
all the investors in DDBs. They would not be earning any
interest on the DDBs after 31.3.2002. Hence it is advisable
to return the duly discharged DDBs for redemption.
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