State-run power financier Rural Electrification Corporation (REC) plans to raise funds through issuance of deep discount bonds in the current financial year, besides raising `1,000 - 1,500 crore through infrastructure bonds.
The company plans to issue 10-year deep discount bonds, also known as zero-coupon bonds, in the last quarter of 2010-11. The face value of these will be `3,000-4,000 crore
The company plans to issue 10-year deep discount bonds, also known as zero coupon bonds, in the last quarter of 2010-11.
The face value of these will be `3,0004,000 crore, while the redemption value will be about `7,500 crore, a senior company executive said.
This April, the government had approved its plan for issue of 2.5 million deep discount bonds with maturity value of `30,000 each for a10-year period, by March 31, 2011. The income from such bonds will be taxed as capital gain only on transfer or redemption or maturity.
The company also plans to come out with its infrastructure bonds by December or January and is likely to raise `1,000-1,500 crore from the issue, the executive said. Subscribing investors would be eligible for income tax exemption up to `20,000 a year under the recently introduced Section 80CCF of the Income Tax Act.
REC had last month received infrastructure finance company status from the Reserve Bank of India. The status allows REC to issue infrastructure bonds and raise funds up to $500 million (Rs 2,200 crore) through external commercial borrowing in a year.
With this, REC can take additional lending exposure of up to 5 per cent of owned funds in case of a single borrower and up to 10 per cent of owned funds for a group of borrowers. The total permissible exposure would, thus, be 40 per cent of owned funds in case of a group of borrowers.
REC finances power generation, transmission and distribution projects across the country.
