State-run IIFCL to offer innovative infra financing

New Delhi: State-run India Infrastructure Finance Co Ltd (IIFCL) is in talks with multilateral institutions to offer innovative financing solutions for infrastructure lending. The NBFC-IFC, which may be converted into a development finance institution, has also batted for a ‘Relay Race’ model to address the existing challenges in infrastructure finance.“We are in touch with most multilateral institutions on both getting the innovative products and for our long-term financing needs,” IIFCL managing director PR Jaishankar said, adding that the company has built a bank of products, some of which will soon be piloted.Jaishankar said the infra-financing firm has been advocating a ‘relay race’ model, which can enable refinancing and take out financing to de-risk banks, and enable longer amortisation period for infrastructure projects.“The first phase infra projects can be financed by set of banks, which can then pass it to long-term lenders after a certain term. It can be relayed from one set of lenders to another, which would lead to longer amortisation periods,” he said, adding that products such as takeout finance help banks to address their asset liability mismatch as infrastructure projects have longer tenure.Jaishankar noted that infrastructure finance cake is too large, and that banks will have to play a role till the alternative financing scenario emerges. “This Budget lays foundation of a new architecture for financing infrastructure and IIFCL will continue to play its role as an innovative lender,” he said, adding that firm is geared up to take on new responsibilities as the government perceives.IIFCL has also proposed an insurance like mechanism covering the amount of termination payments to be set up by insurers and offered for subscription by concessioning authorities. Upon the event of termination, lenders can receive termination payment from the proceeds of the insurance claim without the concessioning authority processing the same.

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