- IRFC looking to mop up Rs 1,000 crore from capital gains bonds
- IRFC opened the bond issue on November 10
- PSU bonds yield interest rate of 5.25%, payable on October 15 every year
Indian Railway Finance Corporation (IRFC) is hopeful of raising Rs 1,000 crore from the recent issue of capital gains bonds, its managing director S K Pattanayak said on Sunday. With an aim to raise Rs 500 crore with the green shoe option to retain over-subscription, IRFC is looking at mopping up Rs 1,000 crore from the capital gains bonds, he said. The IRFC opened the issue last month on November 10. The PSU bonds have a lock-in period of 3 years and presently yields an interest of 5.25 per cent per annum, payable on October 15 every year.
Five Things To Know About IRFC Capital Gains Bonds
1. The IRFC bonds have benefits under Section 54EC of the Income Tax Act, 1961, he said. IRFC is among the four institutions authorised by the Union Finance Ministry to issue such bonds. The other three non-banking financial companies are NHAI, REC and PFC.
2. A person who has received capital gains in a year can invest in these bonds and save tax on capital gains. An investor can invest a minimum of Rs 20,000, and in multiples of Rs 10,000 thereafter, with a maximum of up to Rs 50 lakh in these bonds, during a financial year.
"The IRFC bonds are safe, secure, redeemable and non-transferable, and are a cheap source of funding for us," the managing director said,
3. IRFC is one among the five Railway PSUs selected for listing on the bourses, said Pattanayak, adding that preparations are underway in that direction.
4. Since its inception in 1986, IRFC has been playing a significant role in supporting the expansion of the Indian Railways, meeting about 30 per cent of its extra budgetary requirements. The amount is around Rs 40,000 crore during this fiscal. Stating that the Railways has a big investment plan of Rs 8.56 lakh crore from 2015-16 to 2019-20. The target of funding through IRFC has been pegged at Rs 2.50 lakh crore.
5. IRFC has been assigned the additional task of funding Railway projects through institutional finance, from Life Insurance Corporation of India (LIC), to the extent of Rs 1.50 lakh crore by 2019-20. The funds are utilised mainly for acquiring rolling stock assets and building up infrastructure, constituting a significant part of the annual capital expenditure of the Railways.
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