Andhra Bank and the India Infrastructure Finance Company Ltd (IIFC) have entered into an agreement to cooperate on creating a pool of infrastructure projects, undertake credit appraisal and due diligence, syndication of funds and co-financing. | |
| The long-term funding for infrastructure projects will be between 10 and 20 years. The bank has already earmarked 20 per cent of its gross bank credit for infrastructure finance. |
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| The two companies signed a memorandum of understanding (MoU) to this effect in New Delhi on Wednesday. "The MoU will help us provide focused and meaningful fund for infrastructure projects. Out of our Rs 22,000 crore loan book, 20 per cent has been deployed towards infrastructure funding'' said K Ramakrishnan, chairman and managing director, Andhra Bank. |
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| The bank has been funding infrastructure projects related to power sector, expressways, sea and airports as well as non conventional energy. ``But the scope is substantial and this MoU will help us to leverage it,'' added Ramakrishnan. |
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| IIFCL is an SPV created to provide direct lending of up to 20 per cent of the total project cost to eligible infrastructure projects. It also provides refinance to banks and financial institutions for loans with tenor of five years or more. |
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| With this latest MoU, IIFC has tied up with six banks for long-term infrastructure funding after its was set up in January, 2006. "As of now, we are funding 41 projects worth Rs 7,000 crore,'' said S S Kohli, chief managing director, IIFC. |
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| Three more MoUs with banks are in the pipeline and IIFC is also negotiating with many multilateral and bilateral agencies for sourcing overseas funds, he added. |
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| "In less than a year after it was founded, IIFC's performance has been exemplary in promoting infrastructure projects," said Vinod Rai, secretary, financial sector. |
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| "There is enough liquidity in the markets and what we require is long-term investment with a minimum of 10 years and above. Out of the Rs 10,000 crore guarantee provided by the Centre to IIFC, Rs 5,000 crore has been already used," he said. |
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| Andhra Bank already has an in-house project appraisal team, which specialises in different areas of infrastructure management. "This MoU will also enable us to access the expert pool in IIFC,'' said Ramakrishnan. The bank is also in the process of strengthening the in house project appraisal team. |
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