New Delhi, Nov. 13: Indian Railway Finance Corporation (IRFC) will be issuing rupee bonds worth Rs 6,000 crore in London later this year.
The bond issue, which has been in the works, was cleared by Prime Minister Narendra Modi before he left for his UK tour.
This will be the first "masala" bond issued by an Indian PSU since the government announced taxation rules for such bonds last month.
A nominal 5 per cent income tax, or withholding tax, will be levied on interest earnings from these bonds, similar to the treatment given to offshore dollar or euro-denominated bonds.
At the same time, capital gains from the possible appreciation of the rupee between the date of issue and redemption of the bond will be exempted from tax.
Earlier in the year, the Reserve Bank of India allowed domestic companies to raise offshore bonds denominated in rupee, in a baby step towards full rupee convertibility, one of the objectives set by Reserve Bank governor Raghuram Rajan when he took charge two years ago.
The rupee or masala bonds are Indian rupee-denominated paper issued in offshore capital markets.
Investors of these bonds bear the hedging risks from foreign currency fluctuations.
Earlier, World Bank arm IFC and ADB have issued such masala bonds to raise funds for Indian projects.
Yes Bank pact
Yes Bank today said it has signed a pact with the London Stock Exchange (LSE) for bonds and equity issuance with a focus on green infrastructure finance, under which it plans to list up to $500 million green bond on the bourse by December next year, reports PTI.
The lender said it might use the agreement to raise equity capital through a global depository receipt listing on the LSE.
The two proposals are part of the bank's overall $1 billion of equity capital raising plans.
Meanwhile, leading British lender Standard Chartered, the largest foreign bank in terms of branch presence, said it had entered into an agreement with the British government for a new financial services leadership programme, to help Modi's skilling initiative.
