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Informist, Monday, Jul. 20, 2026

 

--CBDT permits NaBFID to raise INR 200 bln via 10-yr zero-coupon bonds 

--CBDT permits NaBFID to raise INR 200 bln via zero-coupon bonds by FY28 

 

NEW DELHI – The finance ministry has given its approval to National Bank for Financing Infrastructure and Development to raise funds by issuing zero-coupon bonds, according to a gazette notification dated Friday. NaBFID can raise INR 200 billion by issuing 2 million zero-coupon bonds on or before Mar. 31, 2028, for a period of 10 years, the notification said. The bonds will be issued at a discount of INR 102.96 billion, it added.

 

Fundraising through zero-coupon bonds needs permission from the finance ministry, as the Central Board of Direct Taxes has to provide a special tax provision to allow the return on these papers to be classified as capital gains rather than interest income. Capital gains are taxed at a lower rate than corporate tax. Non-interest-bearing bonds, or zero-coupon bonds as they are popularly known, sell at a discount and do not offer any periodic interest payment.

 

This debt instrument had become unpopular and made a comeback in the corporate debt market after a 13-year hiatus with REC Ltd.'s bond issuance in October 2024, which had garnered a strong response from investors and was subscribed almost 10 times. Before that, REC had issued a similar bond in 2010-11 (Apr-Mar).

 

Since then, the government has approved fundraising for a host of public sector undertakings through this instrument, such as Power Finance Corp. Ltd., Indian Railway Finance Corp. Ltd., National Bank for Agriculture and Rural Development. 

 

Set up in 2021, NaBFID is a specialised development finance institution aimed at supporting the country's infrastructure sector, which can significantly gain from an enabling credit flow by means of attractive instruments and channelised investment.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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