PFC All Set to launch Its Maiden 54EC Bond issue


Power Finance Corporation Ltd (PFC) has been allowed by Govt. to raise bonds eligible for capital gain tax exemption u/s 54EC of the Income Tax Act. Section 54EC provides that capital gain subject to a maximum of Rs. 50 lakhs arising from the transfer of a long term capital asset shall be exempt if the assesse invests the whole or any part of capital gains in certain specified bonds within a period of six months.  An investor can save upto to a maximum Rs.10,00,000 by investing maximum permissible amount of Rs. 50 lakhs in these bonds.

PFC intends to launch its maiden 54EC bond issue shortly and will be kept on tap.  Bonds will carry highest domestic credit ratings of ‘AAA’ from CRISIL, ICRA and CARE. As there is no cap on the amount that can be raised by the issuer, full allotment is assured to the investors up to the amount permitted u/s 54EC.

Previously, only NHAI and REC were allowed to issue these bonds. However, in the Finance Act 2017, section 54EC of the Income-tax Act was modified to include any other bond notified by the Central Government in this behalf. Based on this, Power Finance Corporation Limited has got the government approval for issuing bonds u/s 54EC.

Issuer strengths

  • PFC is the lead financier in Indian Power sector
  • PFC is the largest Infrastructure Company in the country based on net worth
  • As per DPE Survey Mar, 2017, PFC is the 7th highest profit making PSU among 320 PSUs
  • PFC has consistent track record of borrowing : ~ Rs.4.5 Lac Crs borrowings till 31.03.2017

PFC in addition to the above referred bonds also intends to raise ECBs and Masala Bonds to meet its borrowing requirements for FY2017-18.

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