State-run India Infrastructure Development Company Ltd (IIFCL) today signed a memorandum of understanding with Life Insurance Corporation of India (LIC) and Infrastructure Development Finance Company Limited (IDFC) to share the cost of financing infrastructure projects.
The MoU, signed in Mumbai today, allows IIFCL to finance 20 per cent of infrastructure projects with LIC and IDFC pooling in another 20 per cent and 10 per cent, respectively.
This arrangement would facilitate "take-out" financing of up to 50 per cent of the cost of infrastructure projects, finance minister Pranab Mukherjee said on the occasion.
The `Takeout Finance Scheme' was launched last year with IIFCL signing a similar MoU with Punjab National Bank, Allahabad Bank, Union Bank, Indian Bank and UCO Bank.
This scheme is aimed at removing the bottlenecks in infrastructure financing by addressing application lifecycle management (ALM), group exposure issues etc, Mukherjee said.
Mukherjee said, under the scheme, IIFCL can take out debt up to 20 per cent of the total project cost, with certain limitations. He said there was a felt need for higher take-out. IIFCL's MoU with LIC and IDFC will provide for take-out of up to 50 per cent of the total project cost in the ratio of 20:20:10 by these institutions, respectively.