Evaluation Study of Equity Support to India Infrastructure Finance Company Limited

As an innovative vehicle, the India Infrastructure Finance Company Limited (IIFCL) was set up in 2006 as a non-banking finance company fully owned by the Government. IIFCL was allowed to raise funds from domestic and overseas markets on the strength of sovereign guarantees to keep borrowing costs low. Moreover, such borrowings did not have to meet the net worth and equity requirements as their repayment was backed by a sovereign guarantee.  The objectives of IIFCL are to provide long-term financial assistance to viable infrastructure projects (both greenfield and brownfield). It also provides innovative financing solutions to promote and develop world-class infrastructure institutions.

The major objectives of the evaluation study are

• To record comprehensively the lessons from the IIFCL experience on areas like:

⇒ Developing innovative financial solutions for infrastructure financing;

⇒ Identifying viable projects (reducing the probability of NPAs in the future);

⇒ Increasing probability of financial closure; accelerating financial closure;

⇒ Re-structuring projects to make them viable;

⇒ Accountability, transparency and the risk management systems in place ; and

⇒ Improving professionalism and stakeholder satisfaction through case studies on selected beneficiary firms and projects and a comparative analysis on these parameters with at least one similarly placed DFI/NBFC

• To identify the key bottlenecks/issues & challenges in the implementation of the different schemes’ of IIFCL
• To have a comparative analysis of Banks, NBFCs and IIFCL providing funds to infrastructure projects in terms of cost of funding, financial closure of projects, return on investments, and among others, through a case study approach.
• To evaluate the role played by Development Finance Institutions (DFIs) in providing funds to infrastructure sector in India
• To identify the infrastructure financing universe–structures and institutions– in India and their contributions in infrastructure financing and to compare the resultant aggregates with the requirements spelt out in the National infrastructure Pipeline.
• In the light of the gaps identified, study the purpose and the role envisaged for the National Bank for Financing Infrastructure and Development (NBFID) and its institutional structure.