Bhubaneswar: The managing director of Indian Railway Finance Corporation (IRFC), Santosh Kumar Pattnayak, Sunday said that he is hopeful of raising Rs 1,000 crore from the recent issue of capital gains bonds.
The Rs 500 crore bonds issue has a green shoe option to retain over-subscription.
The bond issue, opened on November 10, has a coupon rate of 5.25% per annum payable on October 15 every year. The lock-in period is three years.The bonds have benefits under Section 54EC of the Income Tax Act, 1961.
The MD said, “The IRFC bonds are safe, secure, redeemable and non-transferable, and are a cheap source of funding for us.” According to him a person who has received capital gains in a year can invest in these bonds and save tax on capital gains.
Besides IRFC, the union finance ministry has authorised three other concerns–National Highway Authority of India(NHAI), Rural Electrification Corporation(REC) and Power Finance Corporation(PFC) to raise funds through issue of capital gain bonds.
IRFC, which provides financial support to the Indian Railways, is meeting about 30% of the extra budgetary requirement of Railways. This year the target is Rs 40,000 crore.
The IRFC is going to provide extra budgetary support of Rs 2.50 lakh crore as Railways is planning to invest Rs 8.56 lakh crore between 2015-16 and 2019-20. Noting that IRFC is one among the five Railway PSUs selected for listing on the bourses, Pattanayak, who was on a visit here, said preparations were underway in that direction. For the current fiscal, the Railways has planned a capex of Rs 1.31 lakh crore and is looking to raise more than Rs 35,000 crore in addition to its budgetary resources, primarily to procure safer passenger coaches and electric railway locomotives, and pushing the network electrification and signalling modernisation programme.