|
| RBI releases $250 mn to IIFCL arm |
| Arun Kumar / New Delhi Mar 09, 2009, 00:08 IST |
|
 The Reserve Bank of India (RBI) has released the first tranche of $250 million (about Rs 1,250 crore) to IIFC Plc, the UK subsidiary of India Infrastructure Finance Company (IIFCL).
The fund would be used to part-finance import of capital goods by Indian companies in the infrastructure sector.
At a time when foreign investors are averse to taking debt or equity exposure to Indian companies, the fund would be of "immense help" in meeting overseas obligations, said a leading banker.
IIFC Plc Managing Director N K Madan told Business Standard that the fund would be provided at competitive rates to Indian companies. He refused to disclose further details.
This funding is part of the government’s endeavour to use $5 billion of India’s forex reserves for infrastructure development. The government would initially give a guarantee for $250-million bonds with a tenure of 10 years at London Interbank Offered Rate (Libor).
IIFC Plc would lend the money to Indian companies at around 400 basis points over Libor, which would be much cheaper than the current rate in the overseas markets, a senior IIFCL executive said.
The UK subsidiary has already sanctioned $1.06 million to seven projects, including two ultra mega power projects (UMPPs) — Tata Power’s Mundra and Reliance Power’s Sasan. In addition, it has sanctioned loans to two metro rail projects and three power projects.
Once the first tranche of $250 million is exhausted, the central bank will release the second tranche of a similar amount. Asked about the timeframe during which the disbursement was proposed, the IIFCL executive said it would be released in accordance with the requirements of the companies.
IIFCL, which has emerged as the nodal financing agency for the infrastructure sector, has also got permission from the government to raise Rs 40,000 crore through tax-free bonds.
The company has already raised Rs 7,369 crore through the first round of private placement. It is in the middle of raising the second tranche of Rs 2,631 crore. In the ongoing issue, scheduled to close on March 18, the company has mopped up Rs 2,200 crore. The company would use the fund to refinance 60 per cent of the loan given by the banks and financial institutions to infrastructure companies.
The state-owned financial institution has already sanctioned financial assistance of Rs 18,720 crore to 88 infrastructure projects involving a total project cost of Rs 1,47,092 crore and disbursed loans worth Rs 4,140 crore.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
Content Guide
