IRFC plans tax-free bonds again | business | Hindustan Times
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IRFC plans tax-free bonds again

business Updated: Jul 04, 2009 00:31 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The Railways will use its dedicated financing arm Indian Rail Finance Corporation (IRFC) to raise up to Rs 9,170 crore in the current financial year from the market through tax-free bonds for which the Finance Ministry has already given its approval.

“The details of the bond are still to be worked out and so clarity on the amount to be raised and the tenure of the bond are awaited,” said an official at IRFC who did not wish to be named.

It is after five years that the IRFC is invoking the tax-free bond option.

“We raised Rs 50 crore through the issuance of these bonds in 2003-04,” said the official. “The amount will be much higher this time,” he said.

The Indian Infrastructure Finance Company Ltd (IIFCL) last February issued five-year, tax-free bonds to raise Rs 2,600 crore, generating a yield of 6.85 per cent.

As interest rates have come down, experts believe the yields would now come down to 6.5 per cent.

“The bonds are attractive because there are very few instruments that are safe and generate tax- free returns but investors will have to check the returns as it will be critical,” said Surya Bhatia a Delhi-based financial planner.