IIFCL, Union Bank ink deal for Rs.1,500 crore takeout finance

NEW DELHI - State-run India Infrastructure Finance Company Ltd (IIFCL) Tuesday signed a Rs.1,500 crore takeout finance agreement with Union Bank of India for development of seven power and road projects in the country.

This is our first transaction. We target to provide Rs.3,000 crore takeout finance facilities this year, IIFCL Chairman and Managing Director S.K. Goel told reporters after signing the agreement here.

He said IIFCL has also signed agreement with Punjab National Bank, Indian Bank, Allahabad Bank and United Commercial Bank to help fund infrastructure projects in the country.

IIFCL is engaged with several public sector banks to make takeout financing scheme attractive. The scheme involves three parties - the project company, taking over institution and lending banks or financial institutions.

As per the scheme, IIFCL will take out the infrastructure loan from the books of the original lender up to 100 percent of the outstanding amount subject to the condition that the total takeout amount does not exceed 50 percent of the total residual loan of the infrastructure projects.

Since its inception in April 2006, IIFCL has emerged as a key player in infrastructure financing space and it has made gross sanction of Rs.27,778 crore in 156 projects involving project cost of Rs.2,33,399 crore.

Goel said IIFCL did its own due diligence of the proposals before considering them for takeout financing. It was aimed to address the asset-liability mismatch faced by banks while lending to infrastructure sector.