IIFCL to raise Rs 5,000 cr from taxable bonds in 2009-10

Indian Infrastructure Finance Company today said it plans to raise Rs 5,000 crore from taxable bonds over and above Rs 30,000 crore from tax-free papers to fund various infrastructure projects in the country.

"We aims to raise about Rs 5,000 crore from bonds this year," IIFCL Chairman and Managing Director S S Kohli told reporters on the sidelines of Assocham seminar on Basel II norms.

The firm has already raised Rs 500 crore and plans to raise a similar amount through taxable bonds by the end of this month, he said.

The bonds would carry a coupon rate of 7.9 per cent with 15 year maturity, he added.

As part of second stimulus package announced in January this year, the government allowed IIFCL to raise Rs 30,000 crore through tax-free bonds to enable refinancing various projects.

The fund would be raised during 2009-10 for refinancing projects in the core sector, particularly highways and port.

In addition to this, the company has already raised Rs 10,000 crore from tax-free bonds during February and March 2009 for the similar purpose.

Giving details of fund raising plan, Kohli said, the firm is also expecting loan from the Asian Development Bank (ADB) and the World Bank.

The World Bank is considering loan worth  $1.2 billion to be disbursed in tranches, he said, adding ADB is expected to provide financial assistance of $300 million.

Asked about the disbursement from Rs 10,000 crore kitty, he said, funds would be disburse only after financial closure takes place.

It will take another 4-5 months to achieve financial closure in some of the highway projects, he added.

On the strength of Indian Financial System Kohli said banking institutions are more or less immune to current meltdown, but averse to lending due to shaken confidence.

It will take some time for banks to rebuild their confidence on industry to broadbase their lending.

Kohli added that the RBI should help banks to make Basel norms implemented successfully through compensating reserve ratio criteria with Capital Adequacy Ratio level, so that their short-term capital requirement is taken care of without disturbing long-term capital requirement.

 "The whole set of norms should be checked and revised in the context of current economic scenario, as the economic scenario when the norms were made was different than the time they are going to implement," he added.