IDFC receives record 235750 applications for Infrastructure Bonds, 2010
Infrastructure Development Finance Corporation, (IDFC) which entered the Capital Market with its retail bond issue has raised Rs 436 crores against the target of Rs 3400 crores. The issue was open from September 30, 2010 to October 18, 2010, which was extened upto October 25. In view of the popularity of the bond, among the retail investors, the company had received record breaking 2,35,750 applications for about Rs 436 crore to its tax-saving long-term infrastructure bond issue. The company will enter the market again before March 31, 2011 with opening of another tranche of Longterm Infrastructure Bonds.
Analysts said that the timing of the issue plays an important role in that the company did not get the expected subscription due to IPO of Coal India Ltd SBI Bond Issue which was more attractive.
SBI bond issue which carried an attractive rate of interest had received an overwhelming response and the issue was oversubscribed on the opening day as expected. Likewise the IPO of Coal India Ltd from government stable also evinced huge investor interest.
In February this year, the Reserve Bank of India had created a separate entity under the classification of NBFC -- Infrastructure Finance Companies (IFCs). Such IFCs can issue tax-free bonds under Section 80CCF of the Income Tax Act, wherein an investor can avail a deduction of up to Rs 20,000 in the taxable income for the current financial year. Such deduction is over and above the Rs 1 lakh deduction available under Section 80CC of the Income Tax Act. The proceeds raised from the bond issue would be utilized by IDFC to finance the infrastructure projects in the country.