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| IIFCL to provide Rs 1,00,000 cr of low-cost funds |
| Press Trust of India / New Delhi Jan 07, 2009, 20:42 IST |
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Infrastructure refinance company IIFCL will provide Rs 1,00,000 crore of low-cost funds for the development of new core sector projects by leveraging money to be raised through tax-free bonds, as announced in the two stimulus packages.
A top Planning Commission official said the first tranche of the proposed Rs 10,000 crore tax-free bonds would be issued this month by IIFCL to channel resources into big public private partnership (PPP) projects.
While Rs 10,000 crore bonds would be issued this fiscal, another Rs 30,000 crore would be given next fiscal. The entire sum would be leveraged to provide about Rs 1,00,000 crore of low-cost resources to projects, mainly in ports and roads.
"Now that we have provided this, this should support Rs 1,00,000 crore of project level investment, of which the equity component will be Rs 30,000 crore. The rest Rs 70,000 crore will be debt," he added.
He said he favoured that coupon rates should have a reset clause to make them align with government securities few years down the line.
"We are going to use the India Infrastructure Finance Company (IIFCL) to raise low cost resources to help the economy hit by a financial tsunami," the official said.
He said resources will be low-cost because it will be government guaranteed tax-free bonds resulting in low interest cost to the IIFCL.
So far as lending by banks is concerned, he said their resource crunch should not prevent them from lending because they will be getting refinance.
"The lender's risk is not bad in these projects because the fact of the matter is that 90 per cent of the debt is guaranteed in the event there is any kind of default. So it is a situation where you need not worry," he said.
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