Infrastructure project developers can now get cheaper loans through IIFCL's takeout finance scheme. The State-owned company has come up with major modifications to its takeout finance scheme so as to match the demands of various stakeholders including the banks and developers.
A significant change is IIFCL's decision to go in for a transparent and competitive pricing for its takeout finance so that everybody gets a fair treatment on the pricing front. Earlier, all interest rates on takeout finance were negotiable with project developers. Now, it would depend on the ratings of the project and the interest rates would be spelt out on the company's Web site.
Also, now borrowers can directly approach India Infrastructure Finance Company Ltd (IIFCL) for takeout finance. Hitherto, only lenders could refer cases to IIFCL.
“The main objective of the recent changes is to ensure that pricing is non-discretionary and non-discriminatory. All developers whether they belong to big groups or small group will now get the same treatment from IIFCL depending on the rating of the project. They will get discounts ranging from 75 basis points to 200 basis points on the present rate paid to lenders,” Mr S.K. Goel, Chairman and Managing Director, IIFCL, told reporters here on Monday.
Under takeout financing, loans made by banks to infrastructure firms are sold to IIFCL so that banks recover their much-needed funds ahead of the payment schedule under the loan agreement. IIFCL is the sole institution in the country that provides takeout finance scheme.
The advantage of takeout is that it corrects the asset-liability mismatch of banks. While borrowers can get more money from banks, the latter can also provide more loans to infrastructure projects without having limitations on exposure norms.
With interest rates linked to rating of projects, IIFCL's interest rate for loans to projects with highest rating would range from 9.90 per cent to 10.4 per cent. For projects with lowest ratings, the interest range would be 10.65 to 11.15 per cent. As most projects fall under BBB rating category, the interest rates on loans for them would range 10.45 to 10.95 per cent.
“Compared to the 13-14 per cent charged by banks, this rate offered by IIFCL is low and affordable,” Mr Goel said.