ICICI Prudential Launches FMP Series

Although Citi and Merrill Lynch were the first financial institutions to launch the concept of Equity Linked Debentures in India, ICICI Prudential is the first mutual fund house to bring this idea within the reach of retail investors. ICICI will infuse the largest part of this FMP in equity linked debentures, bonds whose periodic interest payments are linked to Nifty index. So if Nifty rises 50% in the year, the issuer of these bonds will pay 50% of the investments as interest, to the fund that year. The only caution being that the fund is closed ended and half yearly exits will call penalties as high as 5% of the corpus. Besides it will be taxed like a debt fund, so profits booked beyond a year will call capital gains tax of 10%, decreasing gains. The new fund offer closes on February 8.