DEEP DISCOUNT BOND :

IDBI and SIDBI had issued this instrument. For a deep discount price of ` 2,700/- in IDBI the investor got a bond with the face value of ` 1,00,000. The bond appreciates to its face value over the maturity period of 25 years. Alternatively, the investor can withdraw from the investment periodically after 5 years. The capital appreciation is charged to tax at capital gains rate which is lower than normal income tax rate. The deep discount bond is considered a safe, solid and liquid instrument and assigned the best rating by CRISIL.