The Union Cabinet is likely to approve a proposal to grant autonomy to the India Infrastructure Finance Company Ltd (IIFCL), paving the way for its being registered as a non-banking finance company (NBFC). The regulatory control over IIFCL would then move from the finance ministry to the Reserve Bank of India.
The company’s chief executive officer Pradeep Kumar said the company would take sectoral experts on its board once the government approval is in place.
The government is also likely to allow its London subsidiary to extend up to 40 per cent of its loan portfolio to private infrastructure companies, instead of the current cap of 20 per cent, to boost lending to the infrastructure sector. Currently, both IIFCL and its subsidiary, IIFC (UK) Ltd, are required to give 80 per cent loan to public-private partnership projects.
“While there is no problem in meeting this norm in India, most projects that approach the UK subsidiary for loan are in the private sector. As a result, the private developers, especially in the power sector, go to Chinese banks. This (cap on lending to private sector) is causing slow disbursement (from UK subsidiary),” said Goel.
On the issue of Chinese equipment in the power sector coming along with credit facility, Goel said this could create a problem in the case of Sino-Indo relations souring, since important power plants would be in lien to Chinese banks.
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Goel said loans in foreign currency to the tune of $633 million had been sanctioned from IIFC (UK) to Indian companies to meet capital expenditure for import of equipment for power and metro projects in India. IIFCL, which was likely to get Rs 3,000 crore from the government in the form of capital infusion, would put around $100 million capital in the UK company.
The government-owned IIFCL also announced 61.3 per cent jump in its consolidated net profit to Rs 262.28 crore for the financial year ended March 2011. The company had earned a net profit of Rs 162.6 crore in the previous financial year.
The total income of the company during the year increased 23 per cent to Rs 1,951 crore. Goel said: “The total income from the year registered a growth of 23 per cent, led by increase in the interest income from lending operations.” At the same time, disbursements have shown an increase of 65 per cent to Rs 16,895 crore, against Rs 10,237 crore at the end of March 2010.
Loan sanctions on a consolidated basis rose 36.5 per cent to Rs 42,208.4 crore, compared to Rs 30,912.4 at the end of 2009-10.
IIFCL, since its inception in 2006, has given loans to over 176 infrastructure projects, including 103 road, 29 power and two airport projects.