National Housing Bank (NHB) will tap the market on Monday with a public offering of tax-free bonds.
The housing finance regulator will use all the funds mobilised in the nature of non-convertible debentures to promote low-income housing in the urban areas, R.V. Verma, Chairman and Managing Director, NHB, told Business Line.
The Centre allowed NHB to raise Rs 5,000 crore through tax-free bonds during 2012-13, of which it can mobilise up to Rs 3,750 crore through this public issue, which will close on March 15.
In January, NHB had raised Rs 600 crore out of the Rs 1,250 crore allowed through the private placement route.
Verma also indicated that NHB would go in for more private placements of tax-free bonds before March-end.
Each bond will have a face value of Rs 10,000 and a tenure of 10 years. For qualified institutional buyers, corporates and high networth individuals, the interest rate offered is 6.82 per cent. For retail investors (those investing under Rs 10 lakh), the rate is 7.32 per cent. Interest will be paid annually.
Verma said NHB will approach the Finance Ministry for allowing it to issue a similar instrument during next fiscal.
In his recent Budget speech, Finance Minister P. Chidambaram said he proposes to allow some institutions issue tax-free bonds in 2013-14.
He had said that bonds worth Rs 50,000 crore would be allowed and the institutions would be decided based on their need and capacity to raise money in the market.