Finmin to seek cabinet nod on changing lending norms
At the meeting, IIFC, which is expected to lend to private sector projects only through refinancing facilities, indicated that such a route is not considered attractive by project sponsors.
By PTI |
NEW DELHI: The Finance Ministry is expected to soon approach the cabinet for changes in the lending norms of the India Infrastructure Finance Company Ltd, set up to provide long-term debt to infrastructure projects.
The Ministry will consult the Planning Commission while preparing a note on such changes, according to a decision taken by a meeting held recently presided by the commission Deputy Chairman Montek Singh Ahluwalia.
At the meeting, IIFC, which is expected to lend to private sector projects only through refinancing facilities, indicated that such a route is not considered attractive by project sponsors.
As such, the meeting agreed that for power projects, where tariff is to be regulated by the respective regulatory commissions in accordance with the provisions of the Electricity Act, 2003, IIFC may also be allowed to lend directly to such projects.
IIFC also suggested that the present stipulation that the company would lend a minimum of 25 per cent of the project cost is onerous and the company should not lend more than the lead bank.
In precise terms, the the company suggested that the lead bank's debt should be equal to or greater than the debt to be provided by IIFC.
However, IIFC's contention that long-term debt provided by it was not found acceptable by banks was contested by the Commission. The plan panel emphasised that the primary objective of setting up IIFC was to provide long tenure debt which was otherwise not available from financial institutions.
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