Media reports indicate that the government would allow institutions to issue tax-free bonds in 2013-14 only after assessing their cash position and taking note of how much they could raise through these bonds last year.
It may be recalled that in the budget 2013-14, the government allowed infrastructure companies to raise a total of Rs 50,000 crore through tax-free bonds.
But the government imposed the condition that institutions would be allowed strictly based on the need and capacity of an institution to raise money in the market.
The government would consider the requirement of individual entities as to whether they are ready for it. Some are saying they got the permission for the issue very late.
It is learnt that firms which were not able to raise the allocated amount last year through such bonds may not get a second chance. Meanwhile, some new entrants could be considered for floating tax-free bonds this year.
Last year, the government had made the norms for tax-free bonds more stringent by tightening commission and lowering the rate.
Several institutions preferred private placement last year
as public issues did not fetch much. But the finance ministry discouraged private placement as investors such as bodies corporate, societies, cooperative banks, trusts were not eligible to subscribe to these bonds.