The Union Finance Ministry has notified Zero Coupon Bond (ZCB) for Power Finance Corporation. The company can raise up to ₹10,000 crore.
Key Highlights:
- Power Finance Corporation (PFC) has been authorized to raise up to ₹10,000 crore via Zero Coupon Bonds (ZCBs).
- The bond will be issued at ₹50,454, with a face value of ₹1 lakh at maturity.
- Maturity period: 121 months (10 years and 1 month).
What is a Zero Coupon Bond (ZCB)?
- No periodic interest payments (unlike regular bonds).
- Issued at a discount, redeemed at full face value upon maturity.
- Investors earn a return from the difference between purchase price and maturity value.
- Treasury bills (T-Bills) are zero coupon securities.
What is a Bond?
- For a company or a government, a bond is a tool for borrowing money.
- The investors earn a return in the form of coupon payments, which are made semiannually or annually,
- throughout the life of the bond.
- When the bond matures, the bondholder is repaid an amount equal to the face value of the bond.
(Source: Business Line)
