NHAI launches tax free bonds to arrange INR 400 crores

(I-Newswire) May 15, 2009 - New Delhi (Paisawaisa) 15 May, 2009: With the economic recession going hammer and tongs almost every sector of the economy, NHAI too is feeling the heat of it. National Highways Authority of India, the authority responsible to get the roads done has now taken a different route altogether to finance its road projects.

According to Mr. A Didar Singh, who is the member of NHAI, said that, "The NHAI plans to raise at least INR 3,000 crore through the tax free bonds in 2009-10 to fund various highways projects. It had raised INR 1,700 crore in the previous fiscal to strengthen the sector."

Government already has given a green signal to the NHAI to arrange INR 4000 crores through tax free bonds in the present financial year. According to the fund-raising strategy, the authority will be issuing 3 year bonds priced at INR 10000 each, which will be carrying a coupon rate of 6.25 percent on the yearly basis. The bond holders will also be eligible for the tax exemption under Section 54 EC of the Income Tax Act, 1961. However, the bonds will not be a negotiable instrument at the same time and would not serve the role of a collateral to avail any loan product.

Mr. Singh also confirmed the news that they are negotiating with the Asian Development Bank for securing USD 400 million loan for the road sector.

Subscription for bond is open from May 11th and will end on March 31, 2010. The minimum application size for these non transferable bonds has been fixed at 5 bonds (INR 50000) and the maximum to five hundred (INR 50 million).

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