The government today decided to hike Infrastructure Finance Company Ltd (IIFCL's) authorised capital to Rs 5,000 crore for enabling it to lend more to the infrastructure sector, funding need for which has been pegged at $1 trillion during the next Plan Period (2012-17).
A provision has also been made to increase it to Rs 8,000 crore, subject to the approval of the Finance Minister, said Information and Broadcasting Minister Ambika Soni, briefing the media after the Cabinet meeting.
"Increase in the authorised capital would enable IIFCL to expand its financial assistance (capability) to infrastructure sector and meet the needs of increased Capital for Risk Weighted Assets Ratio (CRAR)," she said.
The authorised capital of India (IIFCL) currently stands at Rs 2,000 crore.
The government has also decided to bring IIFCL under the Reserve Bank's regulatory oversight to enhance professional capability and increase capital base.
"Bringing IIFCL under the regulatory oversight of RBI with clearly defined prudential norms would be financially prudent and would safeguard long-term sustainability of the institution," Soni said.
She also said IIFCL would be registered as a Non-Banking Finance Company - Infrastructure Finance Company (NBFC-IFC).
The Cabinet has also approved expanding the Board of the company to 13 members from seven now.
"Inclusion of members with expertise in accounting and audit, risk management infrastructure financing, etc would strengthen its management and professional capabilities," Soni said.
The Cabinet had in November 2005 approved the formation of a special purpose vehicle for financing infrastructure. In 2006, IIFCL came into being.
The government envisages over $1 trillion spending on infrastructure projects during the next 5-year plan beginning 2012.
