India Infrastructure Finance Co Ltd (IIFCL) has tweaked some norms relating to its much-awaited takeout financing scheme for funding infrastructure projects. It is likely to launch the scheme with a highway project in Maharashtra.
Under the modified scheme, the state-owned infrastructure financing company would provide takeout financing — to the extent of 100 per cent of the residual amount of the loan — to individual lenders. According to the earlier guidelines, IIFCL had agreed to provide takeout financing to individual commercial banks to the extent of 75 per cent of the residual amount.
“After discussions with various banks, the feedback we received was that the lenders wanted the entire amount to be taken out by IIFCL,” Chairman and Managing Director S K Goel said.
A new clause that has been added is that in case of the lead banker of the lenders consortium, IIFCL shall provide takeout finance up to 75 per cent of the residual amount of loan. However, the total takeout amount cannot exceed 50 per cent of the total residual loan.
For instance, if a consortium of nine banks provides a total loan for Rs 100 crore, then IIFCL will not take out more than Rs 500 crore. Of this Rs 500 crore, lets say eight banks have an exposure of Rs 5crore each and the lead bank Rs 10 crore. According to the new guidelines, IIFCL will now take out Rs 5 crore of the eight banks’ loans on its books while for the lead bank it will only take out Rs 7.5 crore.
Another change that has been incorporated relates to the scheduled date of occurrence of takeout. The scheduled date of occurrence is the actual date on which takeout is scheduled to occur.
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The scheduled date will now be one year, compared to the earlier three-four years after the project got commercially operational.
It was first reported in July that the company was mulling changes in takeout financing guidelines in a bid to make it attractive for banks and project developers.
The total tenor of the takeout amount with IIFCL shall be up to 15 years. The company, however, has not made any changes in the takeout fee the lenders would have to pay. Lenders will pay a takeout fee of 0.3 per cent per annum of the takeout amount to IIFCL.
Maharashtra project
Goel said the first core sector project under the takeout finance scheme was likely to be a highway project in Maharashtra. “Five state-owned banks are likely to be part of this project,” he said.
The scheme is likely to be launched on October 12 with IIFCL planning to take out Rs 2,000 crore of infrastructure loans of the banks in the first phase itself. Under the scheme, the state-owned lending institution would take over some infrastructure loans of banks on its books.
To be eligible for financing, the projects would need to be from sectors like roads and bridges, railways, seaports, airports, inland waterways, power, urban transport, water supply, sewage, and solid waste management among others.
Gas pipelines, projects in special economic zones, international convention centres and tourism projects are also eligible to get the funding.