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Private sector players, who have been looking to Chinese banks for foreign currency loans, may soon get larger loans from the London-based arm of India Infrastructure Finance Company Ltd (IIFCL).
The Government-owned company is looking to hike its UK subsidiary's loan exposure limit for private sector players to 40 per cent from the current 20 per cent.
“The current 20 per cent headroom is negligible. There is more demand. Some project developers who approached our UK subsidiary have moved to Chinese banks for their requirements”, Mr S.K. Goel. Chairman and Managing Director, IIFCL, said here on Tuesday.
If this proposal is cleared by the Government, then IIFCL-UK would be able to cater to larger number of project developers keen to avail themselves of foreign currency loans for import of equipment towards infrastructure projects in India.
Simply put, if the London-based arm of IIFCL were to sanction $100 foreign currency loan in a year, only $20 could go directly to private players. The rest will be available for public sector and public private partnerships (PPP), according to Mr Goel.
IIFCL's London-based arm was set up in 2008 to fund and finance the imported components of infrastructure projects in India through foreign currency loans. The Reserve Bank of India (RBI) had sanctioned $5 billion line of credit, thereby utilising a part of India's forex reserves for creation of Indian infrastructure assets.
“In the initial stage, the Government had placed a cap of 20 per cent on the private sector exposure of our UK subsidiary. An increase of this limit to 40 per cent is under consideration”, Mr Goel said.
More autonomy in offing
IIFCL has written to the Finance Ministry seeking increase to 40 per cent. The Government is considering a proposal to accord more autonomy to the Board of IIFCL. If more autonomy were granted, the IIFCL Board, on its own, would go in for hiking the exposure limit to 40 per cent, said Mr Goel. Already, the Board of IIFCL's UK subsidiary had passed a resolution approving the hike in private sector exposure limit to 40 per cent, according to Mr Pradeep Kumar, Chief Executive officer of IIFCL. IIFCL-UK has sanctioned $1.95 billion to 17 infrastructure projects and disbursed $624.63 million in five cases till March 31, 2011.
Net profit rises
Meanwhile, IIFCL has reported a 138 per cent increase in net profit for the year ended March 31, 2011, at Rs 228.44 crore (on a standalone basis). Total income for the year ended March 31, 2011, increased 23 per cent to Rs 1,951 crore.
On a consolidated basis, IIFCL's net profit grew 61.3 per cent in 2010-11 to Rs 262.28 crore (Rs 162.60 crore). Total income in 2010-11 stood at Rs 2,008 crore.
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