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 told PTI in Bhubaneswar.
Stating that IRFC opened the issue on November 10, Pattanayak said the bonds have a lock-in period of three years and presently yields an interest of 5.25 per cent per annum, payable on October 15 every year. The 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. “The IRFC bonds are safe, secure, redeemable and non-transferable, and are a cheap source of funding for us,” the managing director said, adding, that 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.
Noting that IRFC is one among the five Railway PSUs selected for listing on the bourses, Pattanayak, who was on a visit here, said preparations were underway in that direction. 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, he said. 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, Pattanayak said said the target of funding through IRFC has been pegged at Rs 2.50 lakh crore. For the current fiscal, the Railways has planned a capex of Rs 1.31 lakh crore and is looking to raise more than Rs 35,000 crore in addition to its budgetary resources, primarily to procure safer passenger coaches and electric railway locomotives, and pushing the network electrification and signalling modernisation programme, he said.
IRFC’s cumulative funding to the rail sector has crossed Rs 1.80 lakh crore as of March 31, 2017 and is all set to cross Rs 2.20 lakh crore by March, 2018, he said. The company 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, Pattanayak said. 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.
So far, it has funded acquisition of 8,998 locomotives, 47,910 passenger coaches and 2,14,456 wagons, which constitute around 70 per cent of the total rolling stock fleet of the Indian Railways, the IRFC MD said.
IRFC has also been lending to various entities in the Railways sector like Rail Vikas Nigam Ltd (RVNL), Railtel, Konkan Railway Corporation Ltd (KRCL) and Pipavav Railway Corporation Ltd (PRCL).