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Friday, January 6, 2012

IIFCL inks MoU with IDBI Bank for infrastructure debt funds

India Infrastructure Finance Company Ltd has joined hands with IDBI Bank to launch infrastructure debt fund (IDF) schemes.

A memorandum of understanding (MoU) to this effect was signed on Thursday by Mr S. K. Goel, Chairman and Managing Director of IIFCL, and Mr R. M. Malla, Chairman and Managing Director of IDBI Bank, in the presence of Union Finance Minister, Mr Pranab Mukherjee.

The MoU is seen as the first step towards the rollout of an IDF, which IIFCL expects will be up and running by February end.

Under the MOU, which will be valid for five years, IDBI Bank and IIFCL may act as strategic investors of IDF scheme. Both could also invite other strategic investors in the fund.

It also provides for accepting and approaching other entities, such as a scheduled commercial bank or infrastructure finance company or an international multilateral financial institution, to participate as strategic investor for the schemes.
Advisory committee

Each IDF scheme will have an advisory committee comprising nominees of strategic investors, which will decide on the investment policy and monitor the scheme.

Recently, IIFCL had, in a change of tack, decided to float an infrastructure debt fund through the mutual fund route instead of the non-banking finance company route.

Last month, Mr Goel had said that IIFCL was looking to float a $1 billion infrastructure debt fund and would rope in IDBI Bank and LIC to co-sponsor the fund, along with foreign institutions like the ADB and HSBC.

In June last year, the Finance Ministry had come out with guidelines allowing IDFs to be set up, either as trusts or companies.

While the trust-based IDFs are to be regulated by SEBI, those set up as NBFCs will come under the RBI's ambit.


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