BondX is a fixed-income investment opportunity structured in the form of an SDI, which is backed by receivables of multiple Bonds. These SDIs are rated by a credit rating agency. Investors/Subscribers are provided with expected payouts in the form of monthly interest payments, and stagerred principal repayments. For risk mitigation, all cash flows are managed by a SEBI-registered trustee to ring-fence the receivables
The BondX is a regulated and rated instrument, managed by an independent, SEBI-registered trustee. The returns in the BondX originate from a pool of Bonds receivables, which are individually secured by the Issuer by placing a collateral of a minimum 1.1x of the outstanding principal.
ROI and IRR are complementary metrics and the main difference between the two is the time value of money. ROI gives you the total return of an investment but doesn’t take into consideration the time value of money. For example, INR 1,000 received today is more valuable than INR 1,000 received after 3 months. IRR calculations take into consideration when the INR 1,000 was received, while ROI does not.
IRR hence not only represents the amount of money earned but also how fast it was earned.
Only the monthly interest payout is expected to be taxed at the marginal tax rate of the individual investor; no tax should be payable on the principal repayment. Appreciation (if any) of the price of the SDI, in case of sale prior to the full tenure, is expected to be considered as capital gain and taxed accordingly. Please do not consider this as tax advice. We urge you to speak with your independent tax advisor.
The investment amount is the sum of the face value of each SDI (“Clean Price”) and accrued interest.
Accrued interest is the amount of interest due on the SDI that has accumulated since the last time an interest payment was made. The interest has been earned by the existing holder, but because interest is only paid at set intervals the investor has not received the money yet. If the present holder sells his SDI, he should be entitled to get the interest until the date of the sale.
For example, assume you receive INR 1,000 as interest on the 30th of every month. On the 15th of the month, you decide to sell the SDI. Since you held the SDI for 15 days, an equivalent coupon amount, in this case INR 500 is earned by you but not yet received. Hence, when you sell the SDI, the INR 500 in accrued interest must be added to the sale price to fairly compensate you.
The clean price is the price of a SDI not including any accrued interest. The clean price is typically calculated as the adjusted face value of the instrument closer to the nearest payout date, ceteris paribus. Dirty price is the price of a SDI that includes accrued interest between payout dates.
Timely Interest and Timely Principal (TITP): Under this structure, both interest and principal payouts are promised at specified intervals (monthly/quarterly, etc.). If there is any shortfall in the promised payouts, credit enhancement available in the transaction can be utilized.
Ultimate Interest and Ultimate Principal (UIUP): Under this structure, there is a distinction between promised payouts, and expected payouts. While the interest and/or principal payouts could be expected at specified intervals, they are promised only on the maturity date. This implies that credit enhancement can be utilized only if the principal and/or interest is not fully paid out on/before the maturity date of the transaction.
Timely Interest and Ultimate Principal (TIUP): Under this structure, while the interest payouts are promised at specified intervals, the principal payouts are only expected at specified intervals. This implies that credit enhancement can be utilized if there is any shortfall in promised interest payouts, and also if the principal is not fully paid out on/before the maturity date of the transaction.
Yes, SEBI has mandated KYC requirements for the purchase of the SDIs to prevent money laundering activities
No. It is mandated by SEBI to transfer funds from the bank account in the name of the applicant.
Capital adequacy ratio (CAR) is the ratio of a bank's capital to its risk-weighted assets and current liabilities. As per the current RBI guidelines, all NBFCs and HFCs are required to maintain a minimum capital ratio consisting of Tier I and Tier II capital, which shall not be less than 15% of its aggregate risk-weighted assets on-balance sheet
Gross non-performing assets (GNPA) is the amount of the debts an establishment or people owe to the organization that has failed to collect or honour their contractual obligations
Net non-performing assets (NNPA) is the amount that results upon deducting the provision for any unpaid or doubtful debt from the loan’s sum