State-owned Indian Railways Finance Corporation (IRFC), the fund-raising arm of the Indian Railways, is planning a public issue of its tax-free bonds in December.
Funds raised by IRFC are used for buying locomotives, wagons and coaches, with a small chunk going to Rail Vikas Nigam Limited to fund bankable projects. The Railways pays back IRFC from the passenger and freight services earnings.
“We have already filed the draft prospectus and we plan to come out with the public issue sometime in December,” an official told.
The government has allowed IRFC to raise up to Rs 100 billion through tax-free bonds in the current financial year ending March.
The government has made it mandatory for issuers of tax-free bonds to raise a minimum of 70 per cent of the allocated funds through public issues.
The railway project funding institution had got bids worth Rs 12.25 billion through private placement for tax-free bonds.
“We have not decided on the actual size of the public issue yet. Also, we will be considering the coupons before coming in the market,” the official said.