By callmepandeyji.com Discover what InvIT Bonds are, how they work, their benefits, risks, and why Nitin Gadkari recommends them for stable, high-yield infrastructure investing.
📘 Understanding InvITs First
An InvIT (Infrastructure Investment Trust) is a SEBI-regulated investment trust that allows individuals and institutions to invest in income-generating infrastructure assets—like highways, power grids, and telecom towers. It works much like a mutual fund, but instead of stocks, it holds infrastructure projects.
Examples of InvITs in India:
- IRB InvIT (focused on toll roads)
- PowerGrid InvIT (focused on power transmission assets)
- IndiGrid InvIT (energy infrastructure)
💡 So, What Are InvIT Bonds?
Though not “bonds” in the strictest sense, InvIT bonds refer to the debt instruments issued by InvITs to raise capital. These may be listed or unlisted non-convertible debentures (NCDs) or structured fixed-income products.
They offer:
- Fixed interest payments (coupon)
- A maturity period (often 3–10 years)
- A way to earn passive income from infrastructure
📊 Key Features of InvIT Bonds
| Feature | Details |
|---|---|
| Issuer | Registered InvITs (like IRB, PowerGrid) |
| Returns | 7–10% annually (varies by issue) |
| Tenure | Typically 3–10 years |
| Listed | Some are listed on stock exchanges |
| Risk | Moderate to high |
| Taxation | Interest is fully taxable as per slab |
✅ Why Consider InvIT Bonds?
- Higher Yields – Better returns than bank FDs or traditional bonds.
- Stable Cash Flow – Most InvITs manage assets with long-term revenue contracts.
- Portfolio Diversification – Adds infra exposure with fixed income features.
- Regulated Structure – SEBI regulations add a layer of investor protection.
⚠️ Risks to Keep in Mind
- Project Risk: Delays or cost overruns can affect income.
- Credit Risk: If the InvIT defaults, bondholders may face losses.
- Liquidity Risk: Some InvIT bonds are not easily tradable.
- Taxation: Interest income is taxable (no indexation benefit like debt funds).
🛒 How to Invest in InvIT Bonds?
- Through stock exchanges if they are listed.
- Via debt placement platforms or brokers during public issues.
- For unlisted bonds, through direct placement or wealth managers.
🗣️ Nitin Gadkari’s Endorsement of InvIT Bonds
Union Minister for Road Transport and Highways, Nitin Gadkari, has been a strong advocate for Infrastructure Investment Trust (InvIT) bonds, emphasizing their role in democratizing infrastructure investment and providing stable returns to everyday investors.
🔹 Key Highlights from Gadkari’s Statements:
- Attractive Returns: Gadkari highlighted that NHAI InvIT bonds offer an annual interest rate of 8.05% to 8.5%, which is notably higher than traditional bank fixed deposits. Importantly, the interest is credited monthly to investors’ bank accounts, ensuring regular income. Reference–Businesstoday
- Accessibility for Common Citizens: He emphasized that these bonds are designed to be accessible to the general public, including salaried individuals, pensioners, and even daily wage earners. With a minimum investment amount of ₹10,000, the bonds aim to encourage widespread participation. Reference– livemint.com
- Regular Investment Opportunities: To facilitate ongoing participation, the NHAI InvIT bonds are opened for subscription every 15 days, providing regular opportunities for investors to contribute to infrastructure development. Reference livemint.com
- Strong Public Response: The initial bond issues witnessed overwhelming interest, being oversubscribed seven times within just seven hours of opening, reflecting strong public confidence in the initiative.
- Retail Investor Focus: Recognizing the importance of retail investors, Gadkari mentioned plans to increase the retail component of InvIT bonds from 25% to 50%, further promoting public participation in infrastructure funding.
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Written by Callmepandeyji (Abhishek Kumar)