IIFCL IIFCL to be converted to DFI to boost infrastructure projects
New Delhi/IBNS: The finance ministry has proposed to increase the scope and financial strength of India Infrastructure Finance Company Limited (IIFCL) to a development finance institution (DFI), for which a Bill will be tabled in the budget session of Parliament, said media reports.
The move is seen as an attempt to push infrastructure development that requires long term investment. The proposed changes will lower the cost of finance by the non-banking lender and infrastructure projects of a wider variety.
A Cabinet note to give DFI status to IIFCL has been prepared the department of financial service.
The move to transform IIFCL to DFI draws further significance as the government has planned infrastructure projects, social and economic, equalling Rs 111 trillion under the National Infrastructure Pipeline during 2020-25.
A mint report said IIFCL plans to tap 10 per cent of these infrastructure projects envisaged the government, including premium housing projects.
The change will allow IIFCL to invest in tax free bonds, raise cheaper short term borrowings and to invest in infrastructure invest trusts (InvITs), it added.
Currently, IIFCL lends projects at interest rates starting from 9 per cent but with the flexibility to raise short term debt the lender's cost of borrowing, the lending rate could go down to 6-6.5 per cent.
The Mint reported that IIFCL could be remodelled in the lines of the government owned infrastructure development bodies of other countries like China Development Bank and Brazilian Development Bank.
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