The India infrastructure Finance Co Ltd will evolve a 'takeout financing' scheme in consultation with banks to facilitate incremental lending to the infrastructure sector, finance minister Pranab Mukherjee said in his budget speech.
Takeout financing is an accepted international practice of releasing long term funds for financing infrastructure projects. It can be used effectively to address the asset liability mismatch of commercial banks arising out of financing infrastructure projects. It can also be used to effectively free up capital for financing new projects.
The finance minister has also announced the government's decision that IIFCL will refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next 15 to 18 months.
This is to ensure that infrastructure projects in sectors such as telecommunication, power generation, airports, ports, roads and railways, do not face financing difficulties arising from the current downturn.
The minister stated that the IIFCL and banks are now in a position to support projects involving a total investment of Rs100,000 crores in infrastructure. Combined with the steps taken by the government to increase public investment in infrastructure, this step is expected to provide a big boost to such investment.