80CCF BOND PFC IS COMING SOON IN MARKET

The Reserve Bank of India has cleared Power Finance Corporation’s proposal to mop up Rs. 6,000 crore through tax-free infrastructure bonds in the current financial year. However, the company expects to mobilise only about Rs. 4,000 crore due to limited market appetite.

PFC chairman Satnam Singh said the company received the nod to issue infrastructure bonds on Wednesday. “The first tranche of about Rs. 2,000 crore (will be) in February and the balance in March, depending on market appetite,” Singh said. The company is planning to raise the funds with a coupon rate of 7.75 per cent.

PFC and Rural Electrification Corporation were in July-August last year awarded NBFC-IFC status by the RBI. The status allows them to issue tax-free infrastructure bonds. REC is also looking to raise Rs. 3,000 crore through such bonds in this financial year. 

Investors subscribing to these bonds can avail income tax exemption of up to20,000 every year under the recently introduced section 80CCF of the Income Tax Act. This would be in addition to tax exemption of Rs. 1 lakh annually given to investors for investment in certain other specified instruments.