RV Verma, Chairman and Managing Director of National Housing Bank (NHB) issued tax-free bonds worth Rs 644 crore
NHB was authorized to raise Rs 5,000 crore through tax free bonds during 2012-13. It had room to mobilise upto Rs 3,750 crore through the recently concluded public issue.
Verma informed that the company could have mopped up more funds through this route had it not been for the time constraint.
He said the recent public offering was open only for five days and hence there was not enough time to market the retail issue even though there was a good market for retail.
Of the overall amount of Rs 644 crore, as much as Rs 198 crore was mobilised from retail individual investors. The remaining came from institutional investors.
The delayed clarification from the corporate affairs ministry also impacted tax free bond issues this fiscal, including the recent NHB issue, reports indicate.
Currently, the Companies Act forbids companies from lending to any corporate at a rate of interest lower than the prevailing “bank rate” specified by the Reserve Bank of India (RBI). On March 13, the Corporate Affairs Ministry clarified that in cases where the effective yield on tax free bonds is greater than the prevailing bank rate, there is then no violation of Companies Act.
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