Rural Electrification Company (REC) on Wednesday said it is increasing its shelf limit for tax-free bonds to Rs 6,000 crore from Rs 5,000 crore and coming out with a new issue later this month.

“In terms of CBDT Notification dated February 13, 2014 and Letter of SEBI dated February 21, 2014, REC has filed an amendment in the Shelf Prospectus dated August 26, 2013 for increasing the shelf limit to Rs 6,000 crore from Rs 5,000 crore,” REC said in a filing with the Bombay Stock Exchange.

“The company has also filed Prospectus Tranche-ll for raising an amount of Rs 250 crore with an option to retain over-subscription upto Rs 809.39 crore, aggregating up to R1,059.39 crore through public issue of tax free secured redeemable non-convertible bonds of face value of Rs 1,000 crore,” the filing added.

Ajeet Agarwal, director of finance at REC, said the ministry of finance on further review allowed the company to raise its shelf limit. “With the limit raised, we are looking to have another issue of tax-free bonds by the end of this fiscal,” he added. REC will open its new issue of tax-free bonds on February 28 and the issue is expected to close on March 14.

Agarwal also said that NTPC and NHB have also been allowed to increase their shelf limits by the finance ministry.

The ministry of finance had allotted REC to issue tax-free bonds worth R5,000 crore during the Union Budget in 2013. REC was allowed to raise 30% of the tax-free bonds on a private placement basis.

REC’s earlier public issue of tax-free bonds in September saw strong demand and investors lapped up Rs 3,500 crore and the issue closed a day earlier on September 16 as the shelf limit had been reached. REC also raised Rs 1,500 crore via private placement with a coupon rate of 9.61% with strong demand coming in from mutual funds and qualified institutional buyers.