The National Bank for Agriculture and Rural Development (NABARD) plans to raise Rs. 5000 crore (USD 1.13 billion) through capital gains bonds to provide refinance to cooperative institutions for stepping up farm and rural credit. Finance Minister P. Chidambaram who had promised massive allocation for the Agriculture sector in his latest budget had also provided for support to NABARD, which the highest rural bank in India.

The government hopes to lock in the monies generated from capital gains arising from property sale for a period of three years which will otherwise be charged 20 per cent tax. While the interest earned from these bonds will be charged a 30 per cent tax, the principal is protected from tax.