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MoU signed between IIFCL, LIC & IDFC to provide Takeout Finance for Infrastructure Projects

Economy Current Affairs 2011. MoU was signed between IIFCL, LIC and IDFC to provide Takeout Finance for infrastructure projects

Sep 20, 2011 16:52 IST
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A memorandum of understanding (MoU) was signed between IIFCL, LIC and IDFC on 17 September 2011 in the presence of Union Finance Minister Pranab Mukherjee to provide Takeout Finance for infrastructure projects.


The MoU between IIFCL and LIC and IDFC is to provide for takeout up to 50 per cent of the total project cost in the ratio of 20:20:10 by these institutions respectively. The mechanism is expected to help financing to the tune of Rs.30000 crore under the scheme. This will facilitate banks to take more exposure in new projects, which in turn will help in bridging the gap in infrastructure financing to a great extent.


Takeout Finance Scheme was launched on 12 October 2010 when an MoU between IIFCL and PNB, Allahabad Bank, Union Bank, Indian Bank and UCO Bank was signed. This scheme is aimed at removing the hurdles in infrastructure financing by addressing asset liability mismatch (ALM) and group exposure issues. In this scheme, IIFCL can take out debt up to 20 per cent of the total project cost after the COD of the project with certain limitations.


The Centre fixed the target for agricultural credit flow at Rs 475000 crore, of which Rs.112731 crore had already been extended. The States are to create awareness about the 4 per cent short-term crop loans being extended to farmers, who repay their loans on time.


73,000 habitations were set to be covered by banking services under Swabhimaan which is an ambitious plan for financial inclusion launched by the Central Government.


State leaders  in low credit deposit ratio states such as Madhya Pradesh, Chhattisgarh, Goa and Dadra & Nagar Haveli to utilise State Level Bankers' Committee to boost credit-deposit ratio. All state governements were expected to cooperate to popularise e-payment.

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