$5 billion core sector fund gets going

India Infrastructure Finance Co Ltd (IIFCL) is creating a chest of Rs 10,000 crore through a combination of long-term debt and equity to be used for rupee-denominated loans to companies engaged in infrastructure development.

This is in addition to the Reserve Bank of India's approval to IIFCL to set up a wholly owned subsidiary in the UK that will channel $5 billion (Rs 20,000 crore) of the country's burgeoning foreign exchange reserves for dollar-denominated loans to Indian infrastructure companies. The central bank will issue the $5 billion to IIFCL in tranches of $250 million.

The government has given its approval to set up the subsidiary, which will be operational in the first quarter of 2008, said SS Kohli, chairman and managing director of IIFCL.

Apprehending robust rupee-loan demand from the infrastructure sector, IIFCL is raising around Rs 8,000 crore through various avenues. The institution is in advanced talks with the World Bank to raise $500 million (Rs 2,000 crore). It has signed a Rs 1,000 crore loan from Life Insurance Corporation of India (LIC) and has taken a commitment from the Asian Development Bank for $500 million.

IIFCL has sanctioned around Rs 18,000 crore in 77 projects worth Rs 123,000 crore till date, which will be disbursed over a few years. Loans sanctioned are expected to be more than Rs 20,000 crore in the next financial year. The institution has disbursed loans of around Rs 950 crore in the first nine months of the current financial year and plans to disburse around Rs 5,000 crore more in the next financial year.

Courtesy:hindustantimes.com
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