The Union Cabinet today approved the proposal to provide capital funds of Rs. 400 crore to the India Infrastructure Finance Company Ltd (IIFCL) during 2013-14 with a proviso that further release within the authorized capital may be made with the approval of Finance Minister subject to budgetary allocations being available. It will help IIFCL in funding viable infrastructure projects through long term debt, takeout finance and credit enhancement.

This will supplement the available long term finance for commercially viable infrastructure projects and enable raising long term funds from domestic and overseas markets including bilateral and multilateral institutions at low-cost for onward long-term lending to infrastructure sector.

Background

IIFCL, a wholly owned Government of India company, was incorporated on January 5, 2006 under the Companies Act, 1956 with an authorized capital of Rs. 1000 crore. It commenced its operations from April 2006. IIFCL provides long term debt to viable infrastructure projects in terms of the Scheme for Financing Viable Infrastructure Projects through IIFCL. The authorized capital of IIFCL was enhanced from Rs. 1000 crore to Rs. 2000 crore with the approval of Cabinet on 14.08.208. It was further enhanced with the approval of Cabinet on 13.10.2011 from Rs. 2000 crore to Rs. 5000 crore with a proviso that it may be further increased to Rs. 8000 crore with the approval of the Finance Minister. Presently, the authorized and paid-up capital of IIFCL is Rs. 5000 crore and Rs 2900 crore respectively.

Capital infusion enables state-owned infrastructure financier to extend long-term project debt and credit enhancement for viable projects. Approval to provide capital funds to a government-owned infrastructure financier to support long-term debt, takeout finance and credit enhancement for commercially viable infrastructure projects, with further releases within authorized capital subject to Finance Minister approval and budgetary availability.