IIFCL teams up with 7 banks, promises 20% of funds
The financing mechanism would enable developers to fast-track the financial closure as the projects would be appraised jointly by consortium and hence commence the construction of projects more quickly.
By ET Bureau | Updated:
MUMBAI: Infrastructure funding may get a leg-up with the state-sponsored India Infrastructure Finance Company committing to fund up to 20% of any of the projects to be funded by a consortium of seven banks and facilitating fast track financial closure of projects, giving a new life to an institution that failed to live up to expectations.
India Infrastructure Finance Company, or IIFCL, has signed a memorandum of understanding, or MoU, with seven public sector banks — State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, IDBI Bank and Union Bank, besides public sector insurance firm Life Insurance Corporation to form a consortium to jointly lend to infrastructure projects.
The infrastructure company will participate in projects directly through a syndication of term loans, consortium arrangements as well as co-financing. “What is unique about the arrangement is that borrowers can go to only one of the members of the consortium for getting a project appraised instead of the normal practice of going from bank to bank. The proposal will then be circulated among members for approval,” said IIFCL chairman SK Goel.
“It would provide a single window to the developers to approach multiple lending institutions, which would save time and money on appraisal and sanction of projects and allow them to concentrate solely on the execution/ implementation of the projects,” he added.
The pricing of the loan would be decided by the lead bank and other members. As far as possible, the consortium would facilitate uniform pricing by members.
The financing mechanism created through MoU would enable developers to fast-track the financial closure as the projects would be appraised jointly by the consortium, which will operate in a threetier structure and hence commence the construction of projects more quickly. IIFCL has initiated a number of measures to push infrastructure lending.
Last August, it redefined the conditions of take-out financing for infrastructure lending, adding more clarity to the terms of such deals for banks. “After redefining the conditions, we have facilitated take-out of 10 accounts, involving an aggregate amount of Rs 1,400 crore,” said Goel.
Besides, it has also entered into a MoU with IDFC and LIC to partner in take-out financing in the past three months. The firm is also offering credit enhancements to projects, which is a kind of a guarantee to the project to attract investors.
India Infrastructure Finance Company, or IIFCL, has signed a memorandum of understanding, or MoU, with seven public sector banks — State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, IDBI Bank and Union Bank, besides public sector insurance firm Life Insurance Corporation to form a consortium to jointly lend to infrastructure projects.
The infrastructure company will participate in projects directly through a syndication of term loans, consortium arrangements as well as co-financing. “What is unique about the arrangement is that borrowers can go to only one of the members of the consortium for getting a project appraised instead of the normal practice of going from bank to bank. The proposal will then be circulated among members for approval,” said IIFCL chairman SK Goel.
“It would provide a single window to the developers to approach multiple lending institutions, which would save time and money on appraisal and sanction of projects and allow them to concentrate solely on the execution/ implementation of the projects,” he added.
The pricing of the loan would be decided by the lead bank and other members. As far as possible, the consortium would facilitate uniform pricing by members.
The financing mechanism created through MoU would enable developers to fast-track the financial closure as the projects would be appraised jointly by the consortium, which will operate in a threetier structure and hence commence the construction of projects more quickly. IIFCL has initiated a number of measures to push infrastructure lending.
ADVERTISEMENT
Last August, it redefined the conditions of take-out financing for infrastructure lending, adding more clarity to the terms of such deals for banks. “After redefining the conditions, we have facilitated take-out of 10 accounts, involving an aggregate amount of Rs 1,400 crore,” said Goel.
Besides, it has also entered into a MoU with IDFC and LIC to partner in take-out financing in the past three months. The firm is also offering credit enhancements to projects, which is a kind of a guarantee to the project to attract investors.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
Related Articles
IIFCL plans $1 billion loan from overseas investors; in talks for $400 million ADB funding2026-06-29T06:59:32Z- IIFCL eyes record loan sanction of ₹75,000cr in FY272026-05-31T19:23:49Z
- IIFCL eyes Rs 75,000 crore sanctions in FY26 after record year, says MD Rohit Rishi, NPA Drops to 0.40%2026-05-30T04:55:18Z
ADVERTISEMENT
