New Delhi: India Infrastructure Finance Co. Ltd (IIFCL) plans to borrow $500 million from the overseas market to look after its growing funding needs for mega projects in coming years, chairman S.S. Kohli said on Monday.
“We have sent our proposal to the Reserve Bank (of India). We are expecting the approval shortly,” Kohli said. The planned external commercial borrowing of IIFCL would be backed by sovereign guarantee, he added.
IIFCL, set up by the government last year, expects to lend Rs15,000 crore ($3.5 billion) during 2007-08 for roads, ports, airports, power and other big-ticket projects in India. During 2006-07, the company approved financial assistance of Rs9,240 crore to 47 projects, Kohli said. India wants about $350 billion in investment over the next five years to improve its creaky infrastructure and boost economic growth to double digits from an annual rate estimated just above 9% for the current fiscal year.
“There is huge demand for funds,” Kohli said, adding IIFCL had tied up with 12 banks and two financial institutions to pool funds for infrastructure development. The company has recently signed an agreement with Infrastructure Development Finance Company (IDFC), Citigroup and Blackstone Group to launch a $5 billion fund that will invest $2 billion in equity and the rest in long-term debt of infrastructure projects.