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India Infrastructure Finance Company (IIFCL) has sanctioned low-cost refinance amounting to ₹200 crore to Kerala Financial Corporation, a State-level industrial financing institution.

A Government of India undertaking, IIFCL provides long-term financial assistance to infrastructure projects. The funds have been sanctioned to Kerala Financial Corporation at 8.47 per cent, the lowest rate of borrowing contracted by it so far.

“This will help the State financial corporation to bring down overall cost of funds and lend at competitive rates now,” said Sanjeev Kaushik, Chairman and Managing Director.

This is the first time a Kerala-based public finance institution gets assistance from IIFCL. The corporation will in turn use the fund for financing projects coming up in the State, Kaushik added.

It s also exploring the possibility of raising further low-cost funds through bond issue or share capital. Reliance on bank borrowings for lending activities has kept the cost of funds traditionally high for the corporation.

Since borrowing cost itself was high, it had not been able to reduce its lending rates so far and was unable to lend at market competitive rates, he said.

After assuming charge recently at the corporation, Kaushik has had discussions with various industrial associations in a bid to realign its credit policies and lending terms to suit the requirements of the MSME sector.

The corporation is already offering a special interest rate of 9.5 per cent to the manufacturing sector and 10 per cent to the service sector. Reduction in the rate is expected to benefit thousands of manufacturing, industrial and service sector units in the State.

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