With just four months to go before the current fiscal ends, the Central Board of Direct Taxes has notified rules on issuance of tax-free secured redeemable non-convertible bonds by government-owned infrastructure financing institutions.
According to the notification, the government has cut the total amount to be mobilised through these bonds by `6,500 to `53,500. Presenting the 2012-13 Budget, former Finance Minister Pranab Mukherjee had announced that `60,000 crore would be raised by companies such as National Highways Authority of India (NHAI), Indian Railway Finance Corporation Limited (IRFC), India Infrastructure Finance Company Limited (IIFCL) etc.
According to Finance Ministry sources, the major reason for reducing the targeted amount by `6,500 crore is due to the fact that government anticipates that the response by retail and institutional investors may not be very encouraging. “Given the current slowdown and the government finding itself difficult to raise resources, the target of raising `60,000 crore looks difficult,” said an official familiar with the matter.
The tenure of bonds in the case of IIFCL will be 10, 15 or 20 years, while in the case of other entities it will be for 10 or 15 years.