Economic Survey: IIFCL expected to guarantee bonds of private infra firms

Economic Survey: IIFCL expected to guarantee bonds of private infra firms New Delhi: State-owned India Infrastructure Finance Company (IIFCL) is expected to start providing guarantees for bonds issued by private infrastructure companies besides its direct lending operations, the Economic Survey 2012-13 said on Wednesday.

"The IIFCL is expected to graduate in the 12th Plan from the existing role of a normal lender to that of a catalyst mobilising additional resources for financing of infrastructure," it said.

This, it said, could be achieved by "the IIFCL providing guarantees for bonds issued by private infrastructure companies rather than expanding its direct lending operations".

The move would enable mobilisation of insurance and pension funds, external debt, and household savings.

"The IIFCL would also make subordinated debt available as an additional source of finance. Further, it may also substitute its take-out financing scheme with an Infrastructure Debt Fund," the survey added.

The IIFCL, set up in 2006, provide longterm financing for infrastructure projects that typically involve long gestation periods. It provides financial assistance up to 20 percent of the project cost both through direct lending to project companies and by refinancing banks and financial institutions.

It has sanctioned loans aggregating Rs 40,373 crore for 229 projects involving a total investment of Rs 3,52,047 crore and disbursed Rs 20,377 crore till March 2012 end.

Government has authorised IIFCL to issue infrastructure tax free bonds up to Rs 10,000 crore in the current fiscal.

Towards this it has already mobilised Rs 785 crore and Rs 2,883.88 crore through private placement and Tranche I of public issue of bonds respectively. On February 25, it issued tax free bonds to raise up to Rs 6,331.12 crore.

PTI