The Hindu : Business : IIFCL to commence forex investment fund

Online edition of India's National Newspaper
Wednesday, Feb 13, 2008
ePaper | Mobile/PDA Version

Business

Business

IIFCL to commence forex investment fund

Special Correspondent

Likely to receive $250 million from Reserve Bank of India by this month-end

Awaits Govt. clearance on guarantee on bonds
Already raised $2 billion from an Australian bank

NEW DELHI: In keeping with the Government’s strategy to utilise a portion of the foreign exchange reserves for development of the country’s infrastructure, the state-owned India Infrastructure Finance Company Ltd. (IIFCL) is likely to receive $250 million from the Reserve Bank of India by the end of this month.

“As a first tranche of $5 billion forex funds, we will be borrowing $250 million from the RBI that would be used to lend to Indian companies to import infrastructure equipment. We are awaiting government clearance on guarantee on bonds, which is expected to come by month-end,” IIFCL Chairman and Managing Director S. S. Kohli told newspersons on the sidelines of the bankers’ meeting with Finance Minister P. Chidambaram here on Tuesday.

The Government, Mr. Kohli said, would initially extend a guarantee for $250-million bonds at Libor (London inter-bank offered rate) for a tenure of ten years as a part of IIFCL’s plans to borrow up to $5 billion from the central bank for investment or lending to Indian companies engaged in the field of infrastructure, he said.

Funds required for infrastructure development are estimated at about $ 492 billion over the next five years and with the country’s forex reserves soaring to over $290 billion, the Government is devising ways of utilising a part of the funds for financing such projects.

Apart from the $5-billion fund based on forex reserves, IIFCL had an offshore subsidiary based in London for financing domestic infrastructure projects. IIFCL, Mr. Kohli said, had already raised $2 billion from an Australian bank.

Alongside, through an enabling amendment in rules, IIFCL would be permitted to borrow funds from the National Small Savings Fund. The Government is now considering its request for a loan of Rs. 2,500 crore.

Printer friendly page
Send this article to Friends by E-Mail

Business