Money & Banking

Banks knock on IIFCL's doors for refinance

Our Bureau Mumbai | Updated on February 02, 2011

Mr. S. K. Goel (left), Chairman and Managing Director, IIFCL, and Mr Pradeep Kumar, Chief Financial Officer, at a press conference in Mumbai on Wednesday. -- Paul Noronha

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With the banking system facing persistent liquidity squeeze, banks have contracted to avail themselves of refinance aggregating Rs 3,500 crore from the India Infrastructure Finance Company Ltd (IIFCL), according to a top official of the government promoted special purpose vehicle (SPV) for financing infrastructure projects.

IIFCL has given refinance aggregating Rs 1,500 crore in the financial year so far, said Mr S.K. Goel, Chairman, IIFCL.

The company had raised Rs 10,000 crore in fiscal 2009 by issuing tax-free bonds as part of the Government's fiscal stimulus package for providing refinance.

The SPV's direct lending portfolio has witnessed a slower growth, with loans in the first half edging up by Rs 1,294 crore. Company officials attributed this to not many new infrastructure projects coming up based on the public-private partnership model.

As of September-end 2010, IIFCL's infrastructure loans portfolio stood at Rs 11,133 crore. These loans were disbursed across 111 projects with total project cost of Rs 1,69,542 crore. Among others, almost 48 per cent of the loans disbursed were to the power sector and 41 per cent to the road sector.

Pointing out that IIFCL was created by the Government to assist infrastructure development in the country, Mr Goel said his company was not subject to any restriction on exposure to any particular sector within the infrastructure space.

Retail issue

Meanwhile, IIFCL is planning to mobilise up to Rs 1,200 crore through its maiden retail issue of long-term infrastructure bonds. These bonds, which are in the nature of secured, redeemable, non-convertible debentures, have a face value of Rs 1,000 each. Minimum investment in these bonds is Rs 5,000 and further investment is in multiples of one bond. The bond issue will be open for a month beginning February 4.

While the first two series (of 10 years tenure and offering annual and cumulative investment choices) carry a coupon rate of 8.15 per cent, the next two series (of 15 years tenure and offering annual and cumulative investment choices) carry a coupon rate of 8.30 per cent.

IIFCL can exercise buyback option in the first two series after five years. In the case of the third and fourth series, it can exercise the buyback option after seven years.

Published on February 02, 2011

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