PFC Bonds: Interest Rates, 54EC Bonds, and Redemption Explained
10 October 2025
PFC Bonds
Power Finance Corporation (PFC) is one of India’s leading public sector undertakings under the Ministry of Power. It plays a key role in funding India’s energy infrastructure by providing financial support to power generation, transmission, and distribution projects.
Among its financing instruments, PFC Bonds are well-known among investors looking for fixed-income opportunities backed by a government enterprise. This article by BondScanner aims to provide clear, factual, and educational insights about PFC Bonds, their interest rates, payment schedules, 54EC tax benefits, and redemption process — without making any investment recommendations.
PFC Bonds Full Form
The full form of PFC Bonds is Power Finance Corporation Bonds. These are debt securities issued by Power Finance Corporation Limited, a Government of India enterprise. PFC issues both regular bonds (listed on exchanges) and Section 54EC capital gain bonds (for tax exemption purposes).
Types of PFC Bonds
PFC issues two major categories of bonds:
Regular Corporate Bonds – Tradable debt instruments listed on exchanges like NSE and BSE.
PFC 54EC Capital Gain Bonds – Unlisted tax-saving bonds under Section 54EC of the Income Tax Act, offering exemption on long-term capital gains when reinvested.
PFC Bonds Interest Rate
The interest rate on PFC Bonds varies depending on the bond type and issuance series.
For example:
PFC 54EC Capital Gain Bonds currently offer an interest rate of around 5.75% per annum, paid annually.
Listed PFC corporate bonds may have varying coupon rates depending on market conditions.
Investors should always refer to the official PFC website or the NSE bond listing page for updated series-wise rates.
PFC Bonds 54EC – Tax-Saving Bonds
Under Section 54EC of the Income Tax Act, investors can claim tax exemption on long-term capital gains by investing in eligible capital gain bonds like those issued by PFC, REC, or NHAI.
Key details of PFC 54EC Bonds:
Eligibility: Available to individuals, HUFs, companies, and trusts.
Tenure: 5 years (mandatory lock-in).
Interest Rate: Around 5.75% p.a. (fixed for the tenure).
Interest Payment: Annually.
Tax Benefit: Exemption from long-term capital gains tax under Section 54EC if invested within 6 months of the sale of a capital asset.
Investment Limit: Minimum ₹10,000 and maximum ₹50 lakh per financial year.
Transferability: Non-transferable and non-tradable.
These bonds are issued in demat or physical form and are considered a safe investment option due to the government’s backing of PFC.
PFC Bonds Lock-in Period
For PFC 54EC Bonds, there is a 5-year lock-in period as per government regulations.
This means investors cannot sell, transfer, or redeem these bonds before five years from the date of allotment. Premature encashment is not allowed under any circumstances, as the lock-in is tied to the tax exemption benefit.
PFC Bonds Allotment Status
Investors who have subscribed to the latest PFC bond issue can check their allotment status through the registrar or the issuing bank’s portal.
For example, if you’ve applied through Union Bank of India or KFin Technologies, you can use your PAN or Application Number to check the status.
Allotment confirmations and payment updates are also available through the email or SMS registered during the application process.
PFC Bonds Redemption Process
At the end of the bond’s tenure (typically 5 years for 54EC Bonds), redemption occurs automatically.
The principal amount is credited back to the investor’s registered bank account.
No interest is paid beyond the maturity date.
Investors can check redemption status through the registrar’s portal or by contacting PFC’s investor relations department.
PFC Bonds Status Check Online
Investors can monitor their bond details — allotment, redemption, or interest payment — online.
To check the PFC Bonds status:
Visit the PFC Capital Gains Bond page
Navigate to the “Bondholder Services” section.
Log in using your Folio Number, PAN, or Demat Account details.
View interest and redemption updates.
Additionally, listed PFC bonds can be tracked via NSE’s bond quotes section.
Educational Overview: Why PFC Bonds Matter
Power Finance Corporation Bonds play an important role in India’s bond market. They provide an avenue for investors to participate in the growth of India’s infrastructure financing ecosystem.
From an educational standpoint, PFC Bonds help illustrate:
How government-backed entities raise funds via bonds.
How fixed-income instruments offer predictable cash flows.
How Section 54EC Bonds serve as a mechanism for tax-efficient investment planning.
However, like all investments, bondholders should be aware of key risks such as:
Interest rate risk – Bond prices may fluctuate with changing market rates.
Liquidity risk – Some bonds may not be easily tradable.
Credit risk – Although PFC is a government-backed enterprise, investors should review credit ratings regularly.
Key Features of PFC 54EC Bonds
| Feature | Details |
|---|---|
| Issuer | Power Finance Corporation Limited (PFC) |
| Bond Type | 54EC Capital Gain Bonds |
| Tenure | 5 years |
| Lock-in Period | 5 years (Non-transferable) |
| Interest Rate | ~5.75% p.a. (fixed) |
| Interest Payment | Annually |
| Minimum Investment | ₹10,000 |
| Maximum Investment | ₹50,00,000 per financial year |
| Tax Benefit | Exemption under Section 54EC of the Income Tax Act |
| Listing | Unlisted (for 54EC bonds) |
FAQs on PFC Bonds
Q1. What is the full form of PFC Bonds?
PFC Bonds stand for Power Finance Corporation Bonds, issued by Power Finance Corporation Limited.
Q2. What is the current interest rate on PFC Bonds?
The interest rate on PFC 54EC Bonds is approximately 5.75% per annum, payable annually.
Q3. How can I check my PFC Bond status online?
You can check your bond status on the PFC Capital Gain Bond portal using your PAN or folio number.
Q4. What is the lock-in period for PFC 54EC Bonds?
The lock-in period is 5 years, during which the bonds cannot be sold or transferred.
Q5. Do PFC Bonds offer tax benefits?
Yes, PFC 54EC Bonds offer tax exemption on long-term capital gains if invested within six months of asset sale.
Q6. How is the PFC bond interest paid?
Interest is credited annually to the investor’s registered bank account.
Conclusion
PFC Bonds continue to hold a significant place in India’s bond market, particularly for investors looking for tax-efficient instruments like 54EC capital gain bonds.
While these bonds offer fixed interest rates and strong government backing, they also come with a 5-year lock-in period and are subject to interest rate and liquidity risks. Investors are encouraged to carefully review offer documents and consult financial advisors before investing.
Disclaimer
This blog is intended solely for educational and informational purposes. The bonds and securities mentioned herein are illustrative examples and should not be construed as investment advice or personal recommendations. BondScanner, as a SEBI-registered Online Bond Platform Provider (OBPP), does not provide personalized investment advice through this content.
Readers are advised to independently evaluate investment options and seek professional guidance before making financial decisions. Investments in bonds and other securities are subject to market risks, including the possible loss of principal. Please read all offer documents and risk disclosures carefully before investing.