Cabinet may approve mega infra fund today

The Union Cabinet is likely to approve setting up of a mega infrastructure fund in its meeting today. The Finance Ministry has planned the fund to support takeout finance scheme.

State-run organisations will be allowed to float the fund and raise money from the public. Right now only IIFCL has taken up takeout financing and is expected to benefit from the creation of the mega fund.

The lending institution will get further support of the government to initiate takeout financing where the demand is much more than what was expected originally.

Take-out financing is typically a method of providing finance for longer duration projects by banks by sanctioning medium term loans. The loans subsequently are taken out of books of the financing bank within pre-fixed period, by another institution, preventing any possible asset-liability mismatch.