PFRDA expected to provide more tax benefits in NPS

The Pension Fund Regulatory and Development Authority (PFRDA) on Monday said it will change the withdrawal rules and provide more tax incentive to make National Pension System (NPS) more attractive to small investors, according to a media report.

The pension regulator is expected to soon change the rules to allow NPS subscribers who have an accumulated corpus of less than Rs. 2 lakh on retirement to withdraw the complete amount, the report added.

At present, the subscriber can only withdraw a maximum of 60% of corpus, while the remaining has to be used to buy a monthly annuity.

The central government is expected not to tax the lump sum amount the subscriber will receive on retirement. Currently, the Tier-I account under the NPS has an exempt-exempt-taxed (EET) status, that is any contributions to the scheme and its earnings are not taxed but amount received on withdrawal is taxed.

Under the proposed Direct Tax Code (DTC), tax treatment for contribution in Tier I account will have EEE (exempt-exempt-exempt) status. The regulator is also expected not to increase the minimum amount (Rs. 6,000) to be invested in NPS per annum.

Last month, PFRDA allowed the subscribers to stay invested in the scheme till the age of 70.

EPFO all set to invest in infrastructure debt funds

EPFO all set to invest in infrastructure debt funds

NEW DELHI: In a big boost for India's trillion-dollar infrastructure development ambitions, the country's largest pension fund - the Employees' Provident Fund Organisation - is finally ready to route some of its $100 billion corpus into the cash-strapped sector through Infrastructure Debt Funds or IDFs.

Such long-term savings would be crucial for building new infrastructure that faces severe funding constraints, with banks and developers having little room to deploy fresh funds into long-gestation projects that are hampered by red tape.

IDF is the government's big idea to provide long-term funds to infrastructure projects, and the finance ministry has been trying to route insurance and pension savings into these funds as they can be an important source of stable and, more importantly, domestic money.

Since late 2012, the ministry has been pursuing the idea with the insurance regulator IRDA and the labour ministry, which oversees the retirement savings of over 6 crore formal sector workers parked with the PF office. The provident fund department, also known as EPFO, is now veering around to the finance ministry's point of view.

"The IDF is similar in nature-though with a different structure-to bonds of longer tenure issued by Power Finance Corporation or Rural Electrification Corporation which we already invest in," a senior official in the EPFO told ET. "We can now invest in bonds with tenures up to 25 years, which enables us to consider IDF investments," he said, referring to recent changes in EPFO's investment norms approved by its board.

Under the new norms, the maximum tenure for AAA-rated PSUs has been raised to 25 years from 15 years, and to 15 years from 8 years for AA-rated PSUs. AAA ratings denote the highest level of safety for bond investments.

With EPFO opening up its Rs 5,00,000-crore corpus to IDFs, fresh money could trickle into infrastructure. Around 3,000 company-run PF trusy with EPFO's investment norms, could follow suit. EPFO's move will also serve as a cue for other gratuity and pension funds run by India Inc and the National Pension System run by the Pension Fund Regulatory and Development Authority (PFRDA). Together, these funds manage another Rs 2,00,000 crore.

"We will judge IDFs on the basis of security and suitability for our investment portfolio," the EPFO official said, adding that the retirement fund would only invest in these infra debt funds provided they get a credit rating of AA or AAA. "Unless we get some comfort and security, we wouldn't want to lock in our funds for 25 years, so a good rating is important," he said, citing EPFO's recent investment in bonds issued by the bankrupt national carrier, Air India, on the basis of a sovereign guarantee.

As of now, EPFO is leaning towards investing in IDFs set up by non-banking finance companies that are registered with the Reserve Bank of India instead of the three Sebi-registered IDFs that have been launched recently.

"Infrastructure is a highly risky sector and we don't want to take on execution risks which seem to be implicit in the model adopted by Sebi-registered IDFs," the official explained. "By contrast, IDFs under RBI's watch would invest in infrastructure projects that are already executed, so their returns may be low, but the risks are lower too," he said.

Term Sheet for APSFC Series VI : Primary Issue

Term Sheet for APSFC Series VI : Primary Issue

Description of the Bonds	APSFC Non SLR Bonds Series VI
Issuer	Andhra Pradesh State Financial Corporation (APSFC)
Issue Size	Rs. 160 crore with a green shoe option upto Rs. 160 crore
Nature of Instrument	Unsecured, Redeemable & Non Convertible Bonds in the nature of Debentures.
Mode of Issue	Private Placement
Instrument Form	In Dematerialized Form
Credit Rating	BWR A+ (SO) (Outlook:  Stable) by Brickwork Ratings and IND A (SO) (exp) by India Ratings and Research Limited.
Government Guarantee	Unconditional and Irrevocable guarantee from the Government of Andhra Pradesh for repayment of principal and payment of Interest.
Face Value	Rs. 10,00,000/- per bond
Tenure	10 Years
Call Option	At the end of 5th year.
Put Option	Nil
Redemption	In case call option is not exercised at the end of 5th year, the Corporation repays @ 20% on the bond value every year from the end of 6th year onwards.
Coupon payment	9.15% p.a. Payable Semi-annual.
Annualized Yield	9.36% p.a.
Offer opening date	11-01-2013
Offer Closing date	15-02-2013
Listing	The Bonds issued are proposed to be listed on the Wholesale Debt Market Segment (WDM) Segment of the Bombay Stock Exchange (BSE).
Registrar to the Issue	M/s. XL Softech Systems Ltd.
Trustee to the Issue	M/s. GDA Trusteeship Ltd., Pune to act as Agent & Trustees for and on behalf of the holder(s) of the Bonds.
Bankers to the Issue	HDFC Bank

IDFC Ltd. - Primary Issue - Term Sheet

Primary issue of Private Placement Bond  of  IDFC Ltd.

Issuer	IDFC Ltd. (IDFC OPP 2 2013)
Issue Size	Rs. 50 crores plus greenshoe
Instrument	Secured Redeemable Non-Convertible Debentures
Seniority	First pari-passu
Credit Rating	"ICRA (AAA)" from ICRA and "IND AAA" from India Ratings
Face Value/Issue Price	10,00,000/- per Bond
Minimum Application Size	1 Bond (One Bond) in  multiples of One Bond thereafter
Tenor	5 years  from the Deemed date of Allotment
Put/Call Option	NA
Coupon Rate	9.00% (Annual)
Interest Frequency	January 24, 2014, January 24, 2015, January 24, 2016, January 24, 2017, January 24, 2018
Redemption	25% of Face Value on January 24, 2015 25% of Face Value on January 24, 2016 25% of Face Value on January 24, 2017 25% of Face Value on January 24, 2018
Interest on application money	The Interest on Application shall be paid from the date of realization of the funds upto one day prior to the Deemed Date of Allotment. For further details please refer to the section "Interest on Application Money" " in the Shelf Disclosure Document.
Eligible Investors	Registered Pension Fund, Registered Provident Fund, Registered  Superannuation Fund or Registered Gratuity Fund and or any other person(s) who are authorized to invest (subject to confirmation from the Issuer) and who are specifically addressed through direct communication by or on behalf of the Company are eligible to apply for the Debentures. An application ,made by any other person will be deemed as an invalid application and rejected. Note: Each of eligible investor(s) is required to check and comply with extant rules/regulations/ guidelines, etc. governing or regulating their investments as issued by their respective regulatory authorities, and the Company is not, in any way, directly or indirectly, responsible for any statutory or regulatory breaches by any investor, neither is the Company required to check or confirm the same.

Listing	Proposed on the NSE. The Issue will be listed on Wholesale Debt Market Segment on the NSE within 15 Days from the Deemed Date of Allotment
Issue Opening Date	January 01, 2013
Issue Closing Date	January 21, 2013
Pay in Date	January 01, 2013 to January 21, 2013
Deemed Date of Allotment	January 24, 2013