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Interaction | May 2015

The Government has put special emphasis on the re sector

However, the disbursement depends on the project´s viability, says SB Nayar, Chairman and Managing Director, IIFCL

IIFCL has committed investment for around Rs 20,000 crore for around 4,000 MW renewable projects. When can we expect the disbursements to start?

Renewable energy projects are a part of sectors eligible for funding from IIFCL and we have so far made gross sanctions of about Rs 4,000 crore to renewable energy projects which include solar, wind small and large hydro projects. The commitment quoted at RE-invest 2015 is for the next five years. However, disbursements will entirely depend on project flow and viability.

Have Indian banks opened their doors for the renewable energy sector?
The Government has brought in special emphasis to the renewable energy sector which will not only create additional power generation capacities but would also take care of environ¡mental concerns and IIFCL is a Government of India enterprise and supports this initiative. RE-Invest 2015 has brought all major stakeholders at a common platform giving a boost to renewable energy financing. Renewable power has almost achieved grid parity and we have so far had satisfactory experience in financing such projects. With the solar energy generation cost becoming cheaper and the increased risk perception related to thermal sector, the focus on renewable sector has become sharper.

Can you outline the stringent strategies while financing renew projects?
IIFCL has NIL non-performing assets (NPA) as far as the renewable sector portfolio is concerned. Presently IIFCL is registered as a NBFC IFC under RBI and it follows all regulations in line with the prudential lending practices. We have a risk management framework and NPA policies in place. We also have early warning asset monitoring systems.

According to you, which sub-sector of renew-solar, wind-can attract more funding?

IIFCL is open to all infrastructure projects as given in the RBI´s harmonized list for infrastructure sector. We finance commercially viable infrastructure projects with overriding priority to public-private partnership (PPP).

And added to that, which sector will see maximum sanctions and disbursement from IIFCL?
Despite the turbulent times that the infrastructure sector is going through, IIFCL has managed to increase its sanctions under direct lending in 2014-15 (till December), by a substantial 300 per cent over the last year.

For the half year ended September 2014, IIFCL recorded a net profit of Rs 389 crore, a 64 per cent increase over the corresponding period last fiscal.IIFCL is open to finance all sectors mentioned in the RBI´s harmonized list. In the past, the power sector, especially thermal power projects had the lion´s share of IIFCL´s sanctions.

Currently maximum proposals are coming from renewable energy sector and we expect the railway and private sector to become active in the near future as far as credit demand is concerned. With the fresh impetus provided by the government on renewable energy sector, IIFCL is confident about its growth and ability to contribute to India´s infrastructure sector far more significantly.

There have been significant changes in IIFCL´s operating environment in the recent past, wherein the government has allowed IIFCL to be the lead lender and sanction loans based on its own appraisal. IIFCL is in the process of building its capacities to be able to assume the role of a lead lender. This significant change will strengthen IIFCL´s lending role and in turns increase its contribution to the infrastructure sector.

- Rahul Kamat

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