IIFCL eyes 2nd extension for $5b line of credit on project delays

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SummaryIIFCL England's current USD 5-billion line of credit will expire on March 31, 2014.

India Infrastructure Finance Co has said its British arm, which had already sought a two-year extension for its USD 5-billion line of credit from RBI, is planning to seek nod for one year more on account of higher loan commitments from power sector clients and others.

IIFCL England's current USD 5-billion line of credit will expire on March 31, 2014.

"We had applied for an extension till March 2016. Now we have reassessed, based on the commitments, that we will go up to March 2017," state-owned IIFCL chairman and managing director HarshKumar Bhanwala said.

He was talking to reporters after addressing a round-table on infra financing organised by Ficci and IIFCL Britain here over the weekend. The meeting was chaired by the financial services secretary Rajiv Takru.

"We will write a fresh letter as the original approach to the RBI was till March 2016," he said.

Bhanwala said the British arm has so far sanctioned up to USD 4.4 billion, but cumulatively disbursed only USD 1.1 billion since inception in 2008.

"If we get another extension, by March-end we would take the sanctions somewhere close to USD 5.5-6 billion. Since some of them later on may not come forward, so we are keeping a headroom," Bhanwala said.

The company's London-based arm was set up with the objective of lending in foreign currency to infrastructure companies to fund import of capital equipments.

Bhanwala attributed the wide gap between the sanctions and disbursements to the delay in project execution.

"Companies tend to import towards the end of the construction. If there are effective clearance available upfront, then as per schedule one will import, but due to project delays, it is being postponed," Bhanwala said.

IIFCL England has mostly been funding the thermal power sector, he said, adding it has also funded the Delhi Metro, gas and fertiliser companies.

In the current financial year, Bhanwala said, IIFCL England expects to sanction up to USD 5.5-6 billion worth of projects.

Talking about the IIFCL's takeout finance business, Bhanwala said the company aims to disburse up to Rs 5,500 crore by the end this year. "Cumulative disbursements will reach Rs 5,500 crore by the fiscal end," he said.

Under the takeout finance, IIFCL has sanctioned over Rs 5,000 crore and has disbursed over Rs 3,000 crore up to the September quarter.

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