IIFCL gets RBI nod to finance InVITs

The state agency that provides long-term financial support for viable infrastructure projects has got approval from the Reserve Bank of India to support InVITs and will spend approx. ₹4,000 crore in this segment in this fiscal, a person familiar with the development said.

IIFCL is working out detailed criteria to make investments and is in talks with project implementing agencies and investors, the person said on condition of anonymity.

The finance ministry and IIFCL did not respond to an email seeking comment.

The InVIT structure allows developers to pool their completed projects under these trusts and reduce debt servicing costs by refinancing or monetizing completed projects. Project completion is a major risk for infrastructure projects due to uncertainties over issues such as environment and land acquisition. The variety of completed assets enables InVIT to raise finance at a low cost.

On a standalone basis, IIFCL has approved approx. ₹1.5 trillion to 620 projects under direct lending, takeout finance and refinance, approx. ₹75,000 crore as on 31st December 2020. Company registers sharp increase in net profit ₹285.27 crore in FY21 from ₹50.9 crore in the previous year.

The move to tap InVITs comes at a time when the government is placing a major emphasis on infrastructure development, which is a key element of India’s economic recovery strategy.

InVITs are emerging as a major instrument in the infrastructure space offering greater liquidity and flexibility to developers. The Finance Ministry said in the Union Budget for FY 2012 that debt financing of InvITs and real estate investment trusts by foreign portfolio investors would be allowed to further ease access to finance, and infrastructure. And the availability of funds for real will increase. property area. InVITs are also playing an important role in the asset monetization plan of the government.