The government today said it is planning to allow banks and financial institutions to issue long-term tax-free bonds specifically to fund the crucial infrastructure sector requirements.
“What has been proposed is that there will be financial entities and banks, which will be authorised to issue infrastructure bonds to raise money specifically for lending in infrastructure activities,” finance secretary Ashok Chawla told reporters here today.

Though the finance minister Pranab Mukherjee in the budget speech had said infra bonds would be available to both public sector and public sector entities, Chawla said the proposed facility will not be open to infra companies.

Elaborating on the proposal, he said the government does not intend to allow infra companies to issue such tax-free bonds. “The money raised by these authorised entities can be lent to both private entities and public entities.

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