Govt. may relax takeout financing norms

Govt. may relax takeout financing normsThe government is mulling a proposal to relax the takeout financing rules to let India Infrastructure Finance Co Ltd (IIFCL) to provide longer-term funds to large infrastructure projects as a sole lender.

S. K. Goel, chairman & managing director of IIFCL, said that a committee comprising finance ministry officials was considering relaxing rules to make the takeout financing work better.

Speaking on the topic, Goel said, "Currently, IIFCL cannot be the lead bank. We have proposed that this should be changed and we be allowed to operate as the sole lender after others exit. Project developers will be able to get long-term funds at a lower cost."

Under the proposal, IIFCL will take out a part of the loans granted by banks to infrastructure projects. As infrastructure projects need long-term funds and banks provide short-term funds, takeout financing will help projects secure long-term loans while liberating banks' funds for new projects.

At present, IIFCL is capable of giving loans for the same tenure as given by lenders to infrastructure projects. 

For the year ended March 31, 2013, IIFCL reported a jump of 47.4 per cent in its net profit to Rs 1,000 crore, thanks to lower growth in total costs.

IIFCL is now targeting fresh disbursements of nearly Rs 12,500 crore in current fiscal. The target represents a growth of 62 per cent year-on-year.