Indian Railways Finance Corporation (IRFC), the market borrowing arm of Indian Railways, has been given Rs 1000 crore target to raise from market through capital gains bond which had been launched sometime back.
The Corporation would use the money to fund railway infrastructure projects coming across the country.
Informing about the bond, Managing Director SK Pattanayak said that the bond was risk free in nature. “Capital Gain bond is a new bond for IRFC which has been issued by NHAI, REC etc earlier. We also used it last year but lately. This year we have issued it afresh for the financial year 2018-19 and aims to raise fund amounting Rs 1000 crore,” said the MD addressing a press conference on Thursday.
He added that the bond was set to give 5.75 per cent return and if the relaxation from long term capital gains tax the cumulative return was set to go higher. “5.75 per cent return is sure. If we add the long term capital gains tax it may go up to 10 per cent. The bond has five years of lock in period,” said Pattanayak.
IRFC, which is the dedicated market borrowing arm of the Ministry of Railways, and meets a major portion of the Extra Budgetary Resources (EBR) requirements through financial leasing models, had garnered Rs 40,000 crore in total last year.
“In total through other modes we have been given target to raise Rs 55000 crore this year which would be borrowed to railways for infrastructure developments during 2018-19,” he said, adding that the money collected will go only to railways.
Pattanayak also expressed hope of some good showing from Jharkhand where people, he said, were unaware of availability of any such risk free bonds to invest. “We are here for the first time in Ranchi and want to generate awareness among people about IRFC. We have several options to purchase bonds from broker or through web,” he said and added that the Corporation was all set to issue IPO later this year.
The bond allows an investor to invest minimum Rs 20,000 with a maximum of up to Rs 50 lakh.