Business Domain

IIFC (UK) Limited is mandated to extend long term loans in foreign currency to infrastructure projects in India for import of capital equipment and machinery and raise funds from the Reserve Bank of India, out of foreign exchange reserves. The RBI has approved the proposal for subscription in the US dollar denominated bonds, to be issued by IIFC (UK) Limited, up to a maximum aggregate issuance of USD 5 billion. IIFC (UK) bonds are fully guaranteed by the Government of India.

IIFC (UK) Limited provides long term loans to eligible projects under the Scheme for Financing Viable Infrastructure Projects through IIFCL (SIFTI). The sectors broadly covered for financing of projects include:

Eligibility

IIFC (UK) Limited shall finance only commercially viable projects. Viable projects may also include those projects that will become viable after receiving viability gap funding under a Government scheme. In order to be eligible for funding under SIFTI, a project should be implemented (i.e. developed, financed and operated for the project term) by: (i) A Public Sector Company or, (ii) A Private Sector Company selected under a PPP initiative, or (iii) A Private Sector Company, provided that:

• IIFC (UK) Limited shall assign overriding priority to PPP projects that are implemented by Private Sector Companies selected through a competitive bidding process.
• The total lending for private sector projects shall not exceed 20 percent of the lending programme of the Company in any accounting year.
• The service to be provided by the infrastructure project is regulated, or the project is being set up under an MOU arrangement with the Central Government, any State Government or a PSU.
• The tenor of IIFC (UK) lending to private sector projects should be larger than that of the longest tenor commercial debt by at least two years.
• The project should be implemented through a Project Company set up on a non-recourse basis.

Ceiling on Sanction of Loans

The loan amount to the project company should not exceed: (i) twenty percent of the project cost, (ii) eighty percent of Lead Bank’s share, and (iii) cost of the import of capital equipment and machinery, whichever is the lowest.

Loan Tenor

Long Term Debt means the debt provided by IIFC (UK) Limited to the Project Company where the average maturity for repayment exceeds 8.5 years.

Lending by IIFC (UK) Limited to be treated as ECB

The lending by IIFC (UK) Limited to the project(s) would be treated as external commercial borrowings (ECBs), as permitted under the extant guidelines. Such lending would, accordingly, be subject to the ECB conditions and the reporting & disclosure requirements prescribed by the Reserve Bank of India from time to time.

Disbursement Procedure

The disbursement of the loan to the project shall be made to the standard supplier(s) of the equipment directly as per Letter of Credit, based on the confirmation from the lead/designated bank on receipt of satisfactory reports from the project and fulfilment of other prescribed requirements. In case, there is/are any other bank(s) participating in the foreign currency loan to such project(s) and an escrow account for disbursement of loans is maintained by one of such banks outside India for the project, the disbursement of IIFC (UK) Limited may be considered for routing through the said account for onward payment to the standard supplier(s).