In a move that may boost foreign currency financing for infrastructure projects, government allowed IIFC (UK) to lend upto 50 per cent for projects set up by private companies (non PPP projects) from the present 20 per cent of lending in an accounting year.
The London-based subsidiary of state-owned India Infrastructure Finance Company (IIFCL) was set up in 2008 to lend in foreign currency to infrastructure companies for financing import of capital equipments.
The company has disbursed loans of $975 million to various companies for import of goods since its inception.
Following the increase in the lending limit, the company aims to disburse fresh loan of $1 billion in 2013-14. IIFCL is expecting such a high amount of fresh loan disbursement on the back of above relaxation given by the government.
The government has also allowed the subsidiary to launch a takeout finance scheme on lines of IIFCL.
The lending rates on foreign currency loans to infrastructure sector was reduced by the subsidiary to around LIBOR+ 2 per cent in October 2012 from LIBOR+ 4.5 per cent earlier. This would enable lowering of their financial debt service burden thereby increasing their viability.