The Hindu Business Line : India Infrastructure’s UK arm launching operations next month

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India Infrastructure’s UK arm launching operations next month

Providing finance to companies for importing capital equipment

K.R. Srivats
Ashwini Phadnis

New Delhi, March 16 The offshore subsidiary of India Infrastructure Finance Company Ltd (IIFCL) is to kick off operations in London next month. Indications are that this investment vehicle would commence operations in the first week of April.

This subsidiary would initially take a line of $250 million from the RBI for on-lending to Indian companies to import capital equipment from abroad for their infrastructure projects here. Such an arrangement would help financing of infrastructure projects including airports.

“We are awaiting Government’s approval on guarantee on bonds. It is under process. We hope the subsidiary will begin operations sometime next month. No date has yet been fixed”, Mr S.S. Kohli, Chairman & Managing Director of IIFCL, told Business Line.

Indications are that IIFCL would initially get $250 million from RBI as part of the central bank’s overall plan to provide $5 billion of forex reserves for infrastructure development. The authorised capital of the UK subsidiary has been pegged at $500 million. The initial paid-up capital has not yet been decided, official said. The regulatory approval for setting up the subsidiary has been obtained from the UK side.

IIFCL’s subsidiary would get foreign currency denominated funds from the RBI through issuance of bonds, which are to be guaranteed by the Government.

The UK investment vehicle could also co-finance the external commercial borrowings (ECBs) of Indian companies, for infrastructure projects, solely for capital expenditure outside India. In Budget 2007-08, the Finance Minister, Mr P. Chidambaram, had said that loans by RBI to IIFCL’s offshore subsidiary would be guaranteed by the Government and that the Central Bank would be assured a higher return on its incremental investments.

Meanwhile, the Centre plans to extend equity support to the tune of Rs 500 crore to IIFCL.

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