Takeout Finance Scheme for Financing Viable Infrastructure Projects

In the Union Budget speech for the year 2009-10, the Honorable Union Finance Minister stated “To stimulate public investment in infrastructure, we had set up the India Infrastructure Finance Company Limited (IIFCL) as a special purpose vehicle for providing long term financial assistance to infrastructure projects. We will ensure that IIFCL is given greater flexibility to aggressively fulfil its mandate. Takeout financing is an accepted international practice of releasing long-term funds for financing infrastructure projects. It can be used to effectively address Asset-Liability mismatch of commercial banks arising out of financing infrastructure projects and also to free up capital for financing new projects. IIFCL would, in consultation with banks, evolve a takeout financing scheme, which could facilitate incremental lending to the infrastructure sector”. As a follow-on action, IIFCL undertook a consultative process with key stakeholders and has formulated a ‘Takeout Finance Scheme’. The Empowered Committee modified certain features of the Takeout Finance Scheme. This document presents the modified Takeout Finance Scheme.