Infrastructure Development Finance Corporation (IDFC) is looking to grow its loan book by over 20 per cent in the current financial year, with significant business from refinancing business.
Its net loan growth in FY12 was about Rs 10,000 crore. Of this, the share of refinance was in excess of 30 per cent. In 2012-13, too, refinance will have a similar share in loan growth, said IDFC executive director Vikram Limaye.
Its loan book increased by 28 per cent from Rs 38,215 crore as at March 31, 2011, to Rs 48,888 crore at the end of March 2012.
The cost of funds for IDFC was less than that of banks which actually saw a rise in the cost of resources, including deposits, in 2011-12. It gave room to offer finer rates (charge lower lending rates than counterparts).
Refinance assistance would be given in two ways. First, by replacing the short-term advances with long-duration loans. Second, by providing assistance to projects that have begun to generate cash flow. The starting of operations improves the credit profile of such projects. Existing loans could be replaced with advances at lower rates. This wouldn’t pressurise interest margins, Limaye said.
Net interest margin improved 4.33 per cent in FY12 from 4.19 per cent in 2010-11.
Besides refinance, the pipeline (of existing projects) and new projects will drive business growth. The cumulative outstanding loan approvals at IDFC stood at Rs 69,718 crore at end of March 2012, he said.
Road sector projects and renewable energy - wind and hydro power - projects will come up for funding assistance. The telecom sector will also throw up business opportunities, depending on the decision over spectrum allocation. The infrastructure lender's balance sheet grew by 24 per cent to Rs 60,979 crore at the end of March 2012 from Rs 49,347 crore a year ago.
While IDFC showed a decent performance, lending to infrastructure sector by commercial banks slowed in 2011-12. Several power projects faced problems in firming up fuel linkages and getting environmental and regulatory clearances. The pace of loan disbursement to infrastructure projects dipped to 17.6 per cent in 2011-12 from 38.6 per cent in 2010-11.