Will not aggressively raise lending rates even if interest rates go up: IIFCL Chief Jaishankar

India Infrastructure Finance Company Ltd ( IIFCL) will definitely not be “aggressively” raising its lending rates in coming days even if interest rates in the financial system were to go up as indicated by RBI recently, its Managing Director PR Jaishankar has said. 

At the same time, this State-owned infrastructure lender will stay aligned to market conditions on interest rate movements, he added.

“I will be more competitive than the others. But I will not spoil the pricing. I will certainly not walk the other way if interest rates go up. I will go with others but I have scope to be better than others because of the good liquidity that I possess. We are not overtly bothered about the interest rates going up in the system,” Jaishankar told BusinessLine .

He highlighted that IIFCL had liquidity of ₹4,000 crore, which is a huge negative carry and this will be addressed this fiscal. As on date IIFCL’s base rate stood at 7.1 per cent in line with SBI’s MCLR rate.

“Although SBI has raised its MCLR by 5 basis points, we have not done it. I still have scope to reduce costs by 25-30 basis points. The excess liquidity is an issue that we have to tackle that,” he said.

“IIFCL has been focused on liability management to support its asset growth and is quite comfortable not to pursue interest rate increase aggressively.”

Strong performance

Meanwhile, IIFCL for the fiscal year ended March 31, 2022 reported a net profit of ₹514 crore, up 80 per cent over net profit of ₹285 crore in previous fiscal.

In fiscal 2019-20, IIFCL recorded a net profit of ₹51 crore, which meant that net profit in 2021-22 has gone up over ten fold over the last two fiscal. 

For the fiscal year 2021-22, IIFCL —continuing its turnaround performance that began in 2020-21 – had highest ever standalone sanctions and disbursements of ₹25,120 crore and ₹10,445 crore, respectively. 

“ I am confident we will keep the good performance tempo going this year too. We expect sanctions to double and disbursements to more than double this fiscal,” Jaishankar added.

Pawan K Kumar, Deputy Managing Director, IIFCL, said the infrastructure lender will this fiscal look to enter new areas like Alternative Investment Funds (AIFs) and green bonds so as to further strengthen its balance sheet.

Till March 2022, IIFCL, which was set up in 2006, has participated in 650 projects with a total outlay of over ₹ 11.50 lakh crore , providing financial assistance to over 28 per cent of PPP projects in the country.

Jaishankar also said that IIFCL is keen to enter into new areas and try out new products. He said IIFCL is eyeing lending opportunities to Infrastructure Investment Trusts (InVITs). Last fiscal IIFCL had invested ₹ 975 crore in project bonds including ₹ 325 crore in bonds issued by a renewable energy InVIT. 

Social infrastructure

Jaishankar also said that IIFCL has recently got Reserve Bank of India approval to invest in trusts. This will pave the way for IIFCL to get into social infrastructure driven by trusts.

“We are looking at trusts. Only in two areas — education and health. If you really have to reach out to grassroots you have to consider trusts. We will also not say no to trusts floated by corporates,” he added.

Meanwhile , IIFCL is in the last lap of approving a strategy paper on growth for the medium term and this paper (prepared by KPMG) will be taken to the Board by the third week of June, Jaishankar said. The focus of the strategy paper will be on achieving growth through internal accruals, he noted.

COMMENT NOW