Indian Railway Finance Corporation (IRFC) — the finance arm of Indian Railways — has been allocated an additional tax-free bond limit of Rs 3,500 crore for the current fiscal, sources aware of the development told FE.
“We have been given an allocation of Rs 3,500 crore of tax-free bonds for this fiscal year. We have received a communication from the ministry regarding the matter, but are awaiting the CBDT notification which will provide further clarity on how much could be raised through public issuance or private placement route,” a senior executive at IRFC confirmed.
IRFC was granted a limit of Rs 6,000 crore this fiscal year, and has utilised the entire limit. “We have raised the entire Rs 6,000 crore through tax-free bonds and have given it to the railways,” another executive at IRFC said.
The company was reportedly planning to raise close to $200-300 million through ‘Masala’ bonds for which it has appointed arrangers. However, with this additional limit on tax-free bonds, coupled with the fact that continuous bouts of volatility in global markets led to pricing issues in Masala bonds, IRFC indicated it will primarily consider the tax-free bonds route for fund raising.