The Union Cabinet on Wednesday approved additional infusion of ₹5,300 crore into state owned Infrastructure Finance Company Ltd (IIFCL) via recapitalization bonds in 2019-20 to boost its lending capabilities. In the next financial year, ₹10,000 crore will be infused.
“This will be done through regular budgetary support and / or through issuance of recapitalization bonds. The timing, terms and conditions will be decided by the department of economic affairs," a government statement said.
The Cabinet also approved for increasing the authorized capital of IIFCL from ₹6,000 crore to ₹25,000 crore. “This will enable IIFCL to create requisite headroom for borrowing, thus enabling it to finance big ticket infrastructure projects in line with government of India's target to invest ₹100 lakh crore in infrastructure sector over the next five years," the statement said.
IIFCL was set up in 2006 for providing long-term finance to viable infrastructure projects across various sectors.
The development comes a slowdown in the economy and the fund infusions is crucial as participation by IIFCL in funding infrastructure project opens up possibilities of co-financing by other lenders including larger banks.