IRFC to issue Tax-free bonds
With an aim to raise Rs.8,886 crore, Indian Railway Finance Corporation Ltd (IRFC) will launch a tax-free bond issue. This would enhance IRFC resources for buying rolling stock for the Indian railways.
The Central Board of Direct Taxes (CBDT) has authorized IRFC to issue bonds up to Rs.10,000 crore during 2013 financial year.
The public issue of tax-free, secured, redeemable, non-convertible bonds in the nature of debentures will open on January 21, 2013 and close on January 29, 2013. The bonds have been rated with highest ratings AAA/stable by Crisil, CARE AAA by Care and AAA by ICRA which implies that the bonds have highest degree of safety with regard to timely servicing of financial obligation and carry lowest credit risk.
What is IRFC?
IRFC is a dedicated financing arm of the Ministry of Railways. IRFC’s prime aim is to raise money from the market in order to partly arrange finance for the planned expenditure of the Indian Railways. The money arranged by IRFC is utilized for the acquisition of rolling stock assets and for meeting other developmental needs of the Indian Railways. The borrowing programme of IRFC is guided by the requirements projected by Ministry of Railways.
Thus following are the Objectives of IRFC:
- To finance the acquisition of Rolling Stock assets to be leased to MOR on the best possible rates and terms.
- To tap domestic as well as Overseas Markets for funds at the most competitive rates & terms by issue of tax-free and taxable bonds/FRNs/Foreign Currency Loans/medium term loans from Banks to achieve plan financing target fixed by MOR.
- To achieve ’zero complaint status’ trhough improved customer service to the bondholders/investors/lenders.
- To ensure optimum utilization of resources.
- To constantly review the debt portfolio for possible restructuring to lower the cost.
Categories: Business & Economy Current Affairs 2017