1. Tax Free Bond Issue February 2012

3. REC is a Navratna Central Public Sector Enterprise under Ministry of Power. It is incorporated under the Companies Act, 1956, is listed and has a net worth of Rs. 12,789 Crore as on 31.03.11. Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them. The company disbursed Rs. 28,517 Crores and had a total income of Rs. 8,495 Crores in FY 2011. The company had a PAT of Rs. 2,570 Crores in FY 2011. About the company Consistently rated as 'Excellent'- the highest category - by Govt. of India since 1993-94. Received 'MOU' Award from the Government of India five times, for 'Excellence in performance' Cumulative sanctions & disbursements stand at Rs. 2,60,000 Cr.& 1,30,000 Cr. respectively. Received 'MOU' Award from the Government of India five times, for 'Excellence in performance' Achievements To promote and finance projects in power generation, distribution promotion of decentralized and non-conventional energy sources Implementation of Rajiv Gandhi Gramin Vidyutikaran Yojana To expand and diversify into other related areas and activities like financing of decentralized power generation projects, use of new and renewable energy sources, consultancy services etc. To mobilize funds from various sources To assist loanees by providing technical guidance, consultancy services and training facilities Objectives

4. “Section 10. INCOMES NOT INCLUDED IN TOTAL INCOME. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included – 15 (iv) Interest payable - … …(h) By any public sector company in respect of such bonds or debentures and subject to such conditions, including the condition that the holder of such bonds or debentures registers his name and the holding with that company, as the Central Government may, by notification in the Official Gazette, specify in this behalf” * For exact details, please refer Shelf prospectus dated February 21, 2012 for REC and Tranche Prospectus, filed with the stock exchange(s) from time to time. Relevant Extracts of Section 10(15)(iv)(h) of Income Tax Act,1961: The Interest income on the bonds is tax free No cap on amount of investment eligible for tax benefits No lock-in period* Bonds will be listed on NSE and BSE Advantages The interest income on the bonds is not taxable/exempt. Tenure: Choice of 10 years and 15 years Proposed to be listed on NSE and BSE No lock-in period * Secured issue In demat form only PAN is Mandatory Features

5. Private PlacementPublic Issue IRFC (November 2011) NHAI (December 2011) PFC (December 2011) Tenor 10 years15 years10 years15 years10 years15 years Post Tax Coupon 7.55%7.77%8.20%8.30%8.20%8.30% Pre tax yields (Individuals) Tax @30.9% 10.93%11.24%11.87%12.01%11.87%12.01% (Corporates) Tax @ 32.45% 11.18%11.50%12.14%12.29%12.14%12.29% Effective yield on tax free bonds is higher than other tax free instruments. Indicative rate of return of the recent issues in FY2011-12 are given in the table below: The Public issue of NHAI and PFC Opened in the last week of December 2011 and received huge response from institutional investors, Corporate, HNIs and NRIs. Both the issues were oversubscribed on the first day itself. * G Sec yields as on 21 st February 2011, if the issue opens in March, the reference rate of 29 th March 2012 will be taken. ** The effective yield considers surcharge and cess, as applicable Note: The above rates are mere illustration and the actual coupon shall be decided at the time of opening of the Issue. R ECENT ISSUES OF SIMILAR BONDS Current 10 year G-Sec Yield*: 8.19 % semi annual or 8.35 % annual Therefore, the coupon at an upper cap arrive to 7.85 % for Public Issue The interest on these bonds are tax free, and offers an effective yield** of Individuals and HUF: Up to 11.36 % p.a. Up to 11.62 % - for a domestic corporate entities Please note however the rates above are caps and the company may fix the rates lower than the cap shown above Tax bracketAssumed Coupon RateEffective Yield 10% 7.85%8.75% 20% 7.85%9.89% 30% 7.85%11.36%

6. SchemeTenor Annual Interest Post tax return*Features/LiquidityTax Breaks Fixed Deposits- AAA rated banks 5 years9.25% 6.39% Withdrawal before maturity is allowed at a charge No Tax benefit, TDS deductible PPF15 years8.60% Maximum permissible Rs 100,000 withdrawal permitted from 6th financial year. Section 80C benefit for deposits, interest tax free National Saving Certificate 10 years8.89% 6.14% No Maximum limit of investmentSec 80C benefit, NO TDS Senior Citizen's Saving Scheme 5 years9.00% 6.22% 5 year tenure, minimum age 55, also available with public sector banks Section 80C benefit for deposits, interest taxable Post Office Time Deposit Account 5 years8.56% 5.92% 5 year tenure, maximum no limit. Can be closed after 1 year at a discount and withdraw tax benefit Section 80C benefit for deposits, interest taxable Fixed Deposits - National Housing Bank 5 years9.58% 6.62% Withdrawal before maturity is allowed at a charge Section 80C benefit for deposits, interest taxable *Post tax return at tax bracket of 30%. The effect of Section 80C deduction is not taken in calculation of post tax returns. ** Data represent category average picked up from valueresearchonline.com The above data has been extracted on 21 st February 2012 from respective websites of the issuers and other information available in news. Mutual Fund Schemes** Last 1 year returns Last 3 year returns Tax rates Capital GainsDividends Equity-Large Cap Open Ended0.63%25.07% Short term: 15.45% Long term: Tax free For individuals: Nil For Corporate Nil Fixed Maturity Plans Open Ended9.14%6.97% Short term: Tax bracket Long term:10.30% (without indexation) 20.60% (with indexation) For individuals: 13.52% For Corporate: 32.45% Closed Ended 9.52%- Debt: Gilt Medium & Long Term Open Ended8.13%4.65%

7. Qualified Institutional Buyers (“QIBs”) as listed out below: Mutual Fund, Public Financial Institution as defined in section 4A of the Companies Act, 1956; Scheduled Commercial Bank; Multilateral and Bilateral Development Financial Institution; State Industrial Development Corporation; Insurance Company registered with the Insurance Regulatory and Development Authority; Provident Fund with minimum corpus of twenty five crore rupees; Pension Fund with minimum corpus of twenty five crore rupees; National Investment Fund set up by resolution no. F. No. 2/3/2005- DDII dated November 23, 2005 of the Government of India published in the Gazette of India; Insurance Funds set up and managed by army, navy or air force of the Union of India Insurance Funds set up and managed by the Department of Posts, India Category I - QIB The following investors applying for an amount aggregating to above Rs. 1 lakh across all Series in the Issue: Resident Indian individuals; Hindu Undivided Families through the Karta; Category II The following investors applying for an amount aggregating to up to and including Rs. 1 lakh across all Series in the Issue: Resident Indian individuals; Hindu Undivided Families through the Karta Category III Regional Rural Banks and Co-operative Banks, eligible to invest in the Issue; Companies; bodies corporate and societies registered under the applicable laws in India and authorised to invest in the Bonds; Public/private charitable/religious trusts which are authorised to invest in the Bonds; Scientific and/or industrial research organisations, which are authorised to invest in the Bonds; Partnership firms in the name of the partners; Limited liability partnerships formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (No. 6 of 2009) Category I

8. IssuerRural Electrification Corporation Credit Rating ‘CRISIL AAA (Stable)’ by CRISIL Limited ‘CARE AAA’ by CARE ‘ICRA AAA’ by ICRA ‘Fitch AAA (ind)’ by FITCH InstrumentTax free Secured Redeemable Non-convertible Bonds Face value of each bondRs. 1,000 Minimum application5 bonds or Rs. 5,000 TradingProposed BSE, Trading only in Demat Form Lock in periodNil Taxability Interest –Tax free; Short term/long term Capital Gains on transfer – Taxed at applicable rates as per Shelf Prospectus dated February 21 st 2012 Tenor10 years and/or 15 years CouponTo be decided Interest on application moneyTo be decided Basis of Allotment For each of the categories, full allotment of Bonds to the applicants on a first-come first-serve basis up to the date falling 1 (one) day prior to the date of oversubscription in that category and proportionate allotment of Bonds to the applicants on the date of oversubscription in that category. Mode of AllotmentDemat (NSDL and CDSL) Documents Required (For Individuals and corporate) Details of Depositary and beneficiary account of applicant. MOA, AOA and Power of Attorney or relevant resolution or authority in case of companies, corporate bodies, registered societies, MFs, Insurance Companies etc. * Based on Information given in Shelf prospectus dated February 21 st, 2012 and tranche prospectus filed with the exchange from time to time.