Tag: IIFCL

IIFCL bets big on ‘takeout financing’ to drive growth this year

Banking & Finance

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India Infrastructure Finance Company Ltd (IIFCL), a government owned infrastructure lender, has decided to revise its strategy and place more emphasis on government sponsored projects and takeout financing this year, PR Jaishankar, Managing Director has said.

Aided by the Hybrid Annuity Model (HAM) projects – largely seen in roads sector, this State-owned infrastructure lender is looking to ramp up its takeout financing book to about ₹11,000 crore by end of this fiscal from the current level of ₹6,400 crore, Jaishankar told BusinessLine.

HAM projects

“We expect HAM projects to help us in a big way in achieving growth in takeout financing. 35-40 per cent of HAM projects are getting completed this year. We are already a leader in the HAM segment with 65 HAM projects financed by us. The projects that are already with me, I just have to take additional exposure of 10 per cent. In addition, I will compete for other projects too,” he said.

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. The Takeout Finance scheme offers infrastructure developers the benefit of lower interest rates than that under direct lending, freeing up their exposure limits with banks.

So far, IIFCL has been largely focused on institutional and refinancing solutions to drive growth. After recording strong financial performance in 2020-21, IIFCL is now looking to this fiscal expand its balance sheet in a big way and acquire more assets.

For the current fiscal, IIFCL is eyeing sanctions in excess of ₹20,892 crore, which was the sanctions level achieved in 2020-21 and the highest ever sanctions recorded by the company. IIFCL would aim to achieve disbursement level of over ₹12,000 crore, much higher than the disbursement level of ₹9,460 crore in 2020-21, according to Jaishankar.

Infrastructure investment trusts

Meanwhile, Jaishankar said that IIFCL is awaiting Reserve Bank of India (RBI) approval for it to invest in several Infrastructure Investment Trusts (InVITs) that have taken off in the country. “If RBI clarifies and allow us to invest in InVITs, then this will be another big revenue stream for us and add another ₹4,000 crore in the days to come. Like any other bank, we also want to offer financial assistance to InVITs. How we have to do it, whether we have to invest in the form of security or we have to lend directly at the SPV level, that is something we will look into. I am very hopeful that RBI will consider us favourably”, Jaishankar said.

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No plan to merge IIFCL with new NaBFID, says IIFCL Chief Jaishankar

Banking & Finance

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India Infrastructure Finance Company Ltd (IIFCL), a State-owned entity, on Tuesday made it clear that it was not looking to merge itself with the newly set up National Bank for Financing Infrastructure and Development (NaBFID), which is being positioned as the principal Development Financial Institution (DFI) for infrastructure financing in the country.

“There are no such plans. We have our plans for the future for IIFCL. Of course we would like to take the objectives of the Government forward. That is very very clear”, P.R.Jaishankar, Managing Director, IIFCL said when asked if there are any plans to merge IIFCL with NaBFID.

Stating that IIFCL would like to position itself as a leading innovative infrastructure lender, Jaishankar said that the institution would continue to roll out new innovative products in the infrastructure financing space in the coming days.

Net profit of ₹ 325 crore

IIFCL on Tuesday reported a consolidated net profit of ₹ 325 crore for the financial year ended March 31, 2021. This was a 246 per cent increase over net profit of ₹ 94 crore recorded in the previous year. During 2020-21, IIFCL recorded the highest ever sanctions and disbursements of ₹ 20,892 crore and ₹ 9,460 crore respectively, on a standalone basis.

Also read: The new DFI must look beyond financing

On capital raising plans, Jaishankar said that IIFCL was adequately capitalised and had capital adequacy ratio of 31 per cent. “With this capital adequacy, there is potential to do additional business of ₹ 50,000 crore. The additional capital is required thereafter”, Jaishankar said.

Jaishankar however noted that IIFCL could raise debt resources of about ₹ 15,000 crore this fiscal to fund growth. Pawan Kumar, Deputy Managing Director, IIFCL clarified that the entire ₹ 15,000 crore will be mobilised from the domestic markets.

Keeping with its strategic intent to strengthen the monitoring and surveillance systems through digitalisation, IIFCL is now in the process of putting in place an online project monitoring system, first of its kind in India, for real-time project monitoring during construction phase by integrating high-end solutions like Drones, AI etc.

Also, IIFCL is in the process of establishing an in-house research and advisory wing, which would enable the institution in further bolstering its capabilities to provide policy advocacy, feedback, remedial action, innovative products and processes to government, regulatory bodies, project authorities and other stakeholders, Jaishankar said.

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Reports, BFSI News, ET BFSI

Banking & Finance

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Development Finance Institution (DFI) is expected to be set up with India Infrastructure Finance Company’s (IIFCL) paid-up capital of Rs 10,000 crore and an additional provision of Rs 10,000 crore announced in the Budget 2021, reported Business Standard.

As per the draft note, the Cabinet said that the Reserve Bank of India (RBI) Act and the Banking Regulation Act may be amended to set up the DFI for enabling it access to a line of credit, said BS. quoting sources.

“With an initial capital infusion of Rs 20,000 crore, the government or other investors may infuse up to Rs 1 trillion in the DFI at a later stage. The government’s part will come through the supplementary demand for grants.Prior to subsuming the infrastructure company with the DFI, it will clean up its books by providing for outstanding bad loans worth Rs 4,500 crore.”

It is also expected that the entity may have a lower minimum capital adequacy ratio of 9%, compared to 12-15% for NBFCs. The draft also proposes transfer of the assets and liabilities of IIFCL to National Bank for Financing Infrastructure and Development (NaBFID).

Post the transfer, IIFCL shall fully provide for all its outstanding bad assets, so that the new institution will have a clean book. It also said any additional requirement of money will be given through demand for grants subsequently, said BS.

Banks have been facing the challenge of an asset-liability mismatch in funding infrastructure projects or other projects with a long gestation period, and this gave the rise to the idea of setting up of a DFI, which will include access to low-cost funds from a priority-sector shortfall and greater headroom for borrowing, compared to other NBFCs.

Currently, there are some financial institutions — Indian Railway Finance Corporation, National Bank for Agriculture and Rural Development, and the Small Industries Development Bank of India — are working like the DFI.

Meanwhile, the proposal is likely to get a nod from the Cabinet soon.



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Debasish Panda, BFSI News, ET BFSI

Personal Finance

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State-run India Infrastructure Finance Company Limited (IIFCL) may be merged with the proposed new development finance institution (DFI) that the government is planning to set up to push the projects under the National Infrastructure pipeline, a top official said on Tuesday.

“IIFCL maybe considered for a quick start if it could be subsumed in this new financial institution because they already have some domain expertise and they have some manpower who are already trained and experienced in this field. So that could be a way of looking at it,” financial services secretary Debasish Panda told reporters at a post-Budget interaction. He said the planned National Bank for Financing Infrastructure and Development (NaBFID) will play the anchor for the national infrastructure pipeline.

In her Budget speech on Monday, finance minister Nirmala Sitharaman said she will introduce a bill to set up a DFI. “I have provided a sum of Rs 20,000 crore to capitalise this institution. The ambition is to have a lending portfolio of at least Rs 5 lakh crore for this DFI in three years time,” the FM said in her speech.

Panda said the proposed DFI will play a key developmental role apart from financing the projects.

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