FinMin concerned over NHAI’s inability to use bond funds
- Trouble mounts for Sreesanth as Mumbai cops gather more evidence
- SIT to seek Supreme Court guidance on Maya Kodnani death penalty issue
- Tamil Nadu police bans Yasin Malik-linked pro-Eelam public meeting
- Kings XI Punjab end IPL 2013 campaign with a win
- Narendra Modi: India losing sheen as agricultural nation
The finance ministry has expressed concerns over the inability of the National Highways Authority of India (NHAI) to fully utilise the money raised through tax-free bonds in the last fiscal.
With project awards stuck, the highways agency has been forced to park about Rs 8,500 crore of such funds in fixed deposits.
"The finance ministry has raised the issue. It is almost like arbitrage where the NHAI issued the bonds with a coupon rate of 8.2 to 8.3 per cent, but is earning higher interest in fixed deposit," a person close to the development said. The NHAI is understood to be earning about 9 per cent interest on the money it has parked with banks.
Significantly, the finance ministry is also looking at discontinuing with such tax-free infrastructure bonds from 2013-14. The issue of revenue loss through such bonds has been raised during internal discussions of Budget 2013-14.
Adding to the problem, investor appetite for these instruments has also significantly declined due to low coupon rates offered in the bond issue by Rural Electrification Corporation and Power Finance Corporation.
NHAI officials, while confirming the issue of fund in banks, said that the money could not be used due to slowdown in project award.
"Some of the money, we raised last year, could not be used as many EPC projects could not be bid out due to various regulatory hurdles. We have had talks with the finance ministry on this issue," said JN Singh, member (finance), NHAI.
The finance ministry had allowed NHAI to raise Rs 10,000 crore through tax-free bonds in 2011-12. The authority also has permission to raise another Rs 10,000 crore for the current fiscal, which are likely to be issued next month.
Another official said that a large portion of the money in banks would have been used for land acquisition.
- Quake-hit and shaken, Bhaderwah spends nights in the open
- UP blast accused dies on way to jail, govt wanted to drop case against him
- Former civil aviation secy changes mind, seeks airport security exemption as EC
- BCCI suspects Gujarat players in other teams were also approached
- Police on money trail, Sreesanth in fresh trouble
- Chhattisgarh 'encounter' leaves 8 villagers dead, no Maoist link yet