IIFCL expects to disburse Rs 50,000 crore in the next financial year

With upturn in the capex cycle and infra investments, India Infrastructure Finance Company (IIFCL) expects to disburse Rs 50,000 crore in the next financial year (FY23).

While it visited the market after a gap of eight years to raise Rs 1,500 crore via bonds last week, the government-owned finance company is looking to raise up to Rs 3,000 crore before March-end, to fund the sanctioned credit.

P R Jaishankar, managing director (MD), IIFCL, told Business Standard that the infrastructure projects are such that bulk use of sanctioned credit happens in the second year onwards and goes on in the third and fourth years.

He said, “Now onwards, we will see a bulk of the disbursement from the sanctions we have done.”  IIFCL’s book was a little static till 2020, but with the sanctions and approved credit lines awaiting use, it is Rs 2.12 trillion now.  And, almost 30 per cent of these loan sanctions have happened in these two years. The company intends to grow loan approvals to Rs 3 trillion by the end of March 2023, he said. 

Outstanding advances stood at Rs 37,688 crore at the end of September 2021. They rose from Rs 33,637 crore in March 2020 and Rs 36,647 crore in March 2021, according to ICRA.

In November 2021, the Reserve Bank of India (RBI) allowed the company to invest in bonds and infrastructure investment trusts (InvITs). 

This area will be approached with greater focus in FY23 and contribute to top-line growth, he added. 

Along with growth in overall funding to the sector, the quality of IIFCL’s assets has also improved. 

The share of A, AA and AAA rated exposure has risen to 60 per cent now from just 20 per cent two years ago. 

The portfolio quality has improved because of emphasis on refinancing completed projects and a lot of due diligence. 

Also, it has put in place an integrated management framework, which has been important for taking larger exposures, digitisation and online monitoring.

The company opted for focussed approach to recoveries as termination payments were not forthcoming. 

The NPA (non-performing assets) situation has been brought under control and increased provision coverage, Jaishankar said.

IIFCL hopes to reduce gross NPAs to below 10 per cent by this month from 14.2 per cent in March 2021. It hopes to pare net NPAs to below 4 per cent by the end of this financial year from 5.8 per cent in September 2021.