Custom Search

Wednesday, October 16, 2013

RBI rejects takeout finance plan of IIFCL’s London arm

The Reserve Bank of India has rejected IIFCL’s proposal to provide takeout finance at the latter’s wholly-owned London subsidiary.

This is despite the Centre giving its nod to IIFCL’s London arm to operate in the takeout finance segment.

The RBI’s move is a setback of sorts for the state-owned infrastructure lender, IIFCL, which was betting big on takeout finance to speed up disbursements from its London subsidiary.

Takeout financing at London was envisaged to be similar to IIFCL’s takeout scheme in India. Under takeout financing, loans made by banks to infrastructure firms are sold to IIFCL so that banks recover their funds ahead of the payment schedule under the loan agreement.

India Infrastructure Finance Company Ltd had contended that allowing takeout at London would speed up disbursements from its subsidiary there.

Any Indian infrastructure project developer who had raised external commercial borrowings for equipment imports could approach IIFCL’s London arm and reduce its borrowing cost, it was proposed. But RBI has not bought into this argument and, hence, rejected the proposal, sources close to the developments said.

Foreign banks

The RBI has contended that takeout at London will not be appropriate as it could end up benefiting foreign banks, which provided ECBs to Indian infrastructure developers.

In 2012-13, IIFCL had, under its takeout finance scheme in India, disbursed Rs 2,126 crore.

Source: thehindubusinessline


Post a Comment

Popular Posts

Desi Google | A2Z Famous Quotes | What's Cooking America | Joke Site