Wednesday, October 9, 2013

Infra Has Been Pushed Owing To ADB approving $700-m loan for IIFCL

 An amount of $700-m loan has been approved for India Infrastructure Finance Company Ltd (IIFCL) by the Asian Development Bank (ADB). IIFCL is a state owned organization that focuses on infrastructure development. Considering the part of the funding, the development bank based at Manila will, support take-out financing in India, for the first time. As part of this, take-out finance will replace bank loans, thus freeing banks to invest in Greenfield projects. This will also ease their sector and borrower exposure limits. 

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With the new financing facility that will accelerate Infrastructure Investment Facility in India, will also focus on supporting public-private partnership projects in highways, roads, airports, urban infrastructure and some renewable energy projects. According to a lead finance specialist in ADB’s South Asia Department, ADB’s funds will be provided through two loans under a multi-tranche financing facility. The first tranche of $400 million will be released from January, the second of $300 million will be mostly released in 2016, according to the lead finance specialist from ADB. The payment of the second loan centers on the performance of the first tranche.

The financial specialist also went on to say that the market was not ready for a product like take-out finance. However, the condition was now was such that take-out finance could play a major role in infrastructure development. It is believed that the foremost loan of $400 million will have two components — direct loans to project developers and take-out finance. For take-out finance, around 40 per cent of the first tranche is likely to be allocated. It is also noteworthy that the IIFCL’s take-out finance scheme has been operational since November 2012. Until now, IIFCL has distributed Rs 2,300 crore under this scheme. 

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As a loan towards India Infrastructure Finance Company Ltd (IIFCL), an amount of $700-m loan has been approved by the Asian Development Bank (ADB). IIFCL is a state owned organization which focuses on infrastructure development. 

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