Debentures are like bonds, and are issued by a company with a fixed tenure, after which they are redeemed.
The interest rate offered by Edelweiss is higher than the rates available in banking channels. Fixed deposit interest rates in India are in the 6%-7% range at present.
The actual interest rate on the debenture will depend on the tenure, which varies from 3 years to 10 years.
Interest will be paid monthly or annually, according to the choice made by the investor, the company said.
The debentures will also be listed on the BSE and the NSE, allowing investors to sell the instrument before the maturity period. They can be purchased from Edelweiss Financial Services or from Axis Bank.
The debentures have received “AA/Stable” rating by CRISIL and “AA” rating with a Stable Outlook by ICRA.
The issue is open from today to the 22nd of this month.
The company plans to raise between 250 to 500 cr via the issue, to be used in its retail lending business.
“The credit needs of the SME sector have not been adequately addressed thus far. This is a significant opportunity which we are addressing through our rapidly expanding reach and customized product offerings in ERF,” said Anil Kothuri, Head – Edelweiss Retail Finance.
ERFL (Edelweiss Retail Finance) is focused on loans to individuals and corporates, including SME Finance, loans against property, construction finance and rural finance. As on January 31, 2018, ERFL had 83 branches.