As per The Economic Times of India: It has been decided by government to clamp down on excessively high interest rates and commissions paid by entities such as National Highways Authority of India (NHAI) that are in line to issue tax-free bonds of nearly Rs 60,000 crore during the current fiscal.

The finance ministry will soon finalize norms to ensure that the exchequer, which will lose resources through the tax sops, is not burdened with a higher bill followed by the issue being raked up by Gajendra Haldea, advisor to Montek Singh Ahluwalia, deputy chairman of Planning Commission.

In January, soon after the NHAI issue, he had written to the road transport department saying that the brokerage of the order was Rs 110 crore when the government was paying as low as 0.15% for disinvestment.

Following this, the finance ministry initiated an enquiry, which may now extend to NHAI, and came to the conclusion that the road construction agency ended up paying higher interest rate and even the timing of the issue was something that was looked at. When tax-free bonds were issued by other agencies such as Hudco and REC during the last fiscal, some of the deficiencies found in the NHAI  tax-free bonds programme were sought to be rectified. For instance, lower commission was something that the finance ministry insisted upon.

NHAI official said that the finance ministry had raised certain queries on the Rs 10,000-crore tax-free bonds issue and the agency has said that all norms were followed. “If the government thinks that the norms should be tightened, we are all for it,” the official said.

Now, North Block wants to strengthen the process through a fresh set of guidelines. While interest rates are already decreasing, high net worth individuals (HNIs) and institutional investors, who invested in the bonds, may be in for a further reduction interest rates, sources indicated. At present, the interest rate on tax-free bonds cannot be less than 50 basis points lower than the yield on a government security of the same maturity during the last day of the preceding month. This clause may be diluted this year, although the new formula is yet to be decided.

Besides, officials said that the commission paid to institutional buyer may be cut as there was no point paying bank commission on its own investment.