Refinance Scheme

Home Refinance Scheme

New Refinance Scheme of IIFC (UK)

1. Objective:

The primary objective of IIFC (UK)’s refinance scheme is to augment increased flow of funds for the development of infrastructure in the country. Under the scheme, IIFC(UK) will provide refinance to the banks and financial institutions in respect of their lending to infrastructure projects, and seek to augment flow of funds to NBFC-IFCs/NBFCs set up by the Government of India for financing infrastructure projects meeting specified criteria for refinance.

2. Eligibility:

  1. Eligible Institutions:
    1. Scheduled Commercial Banks in India
    2. Public Financial Institutions notified under  Section 2(72) of the Companies Act, 2013.
    3. NBFC-IFCs with an asset size of at least Rs.500 crore with rating of A+ or above
    4. Systemically Important Non Deposit Taking NBFCs (NBFC-SI-ND) set up by  Government of India for financing infrastructure projects in education or health.

Eligible Infrastructure Projects: Infrastructure projects from any of the sectors as defined under Harmonised List and / or ECB guidelines {in case of IIFC (UK)}.

3. Extent of Refinance:

IIFC (UK) shall provide refinance up to 80% of the loans outstanding to eligible borrowing institutions.

4. Tenor of Refinance:

The maximum tenor of refinance may be based on the prevailing liabilities profile of IIFC(UK) with the minimum tenor being at least one year.

5. Repayment of Refinance:

The repayment of principal and payment of interest may be on monthly/quarterly basis. Repayment of principal may be structured to include equated instalments, structured repayments, bullet repayments, etc. The due dates of payment of interest and principal shall be informed to the eligible institutions in the repayment schedule after each release of refinance.

6. Exposure of IIFC(UK):

The credit risk of the underlying loan(s) against which refinance is extended by IIFCL remains fully with the eligible borrowing institution to which refinance is extended. IIFCL’s exposure would be on the Eligible Institution to which Refinance is extended by IIFCL. The permissible exposure of IIFCL shall be subject to maximum regulatory exposure limits.

7. Other Terms of Refinance

  1. The maximum time limit for availment of refinance is within three months from the date of sanction of refinance by IIFC(UK).
  2. Failure to service debt obligations would attract a penal interest of 2% p.a. and IIFC(UK) would have all the rights for recovery of such Refinance amount along with interest/penal interest/ expenses for recovery, fee, any other expenses in this regard, etc. from the eligible institution.
  3. Prepayment of refinance shall attract prepayment penalty of 2% of the outstanding balance refinance amount.
  4. The borrowing entities shall duly submit a certificate every quarter clearly indicating the outstanding balance in respect of each underlying project against which refinance has been availed.
  5. The borrowing entities shall endeavor to avoid having adverse balance (outstanding balance of refinance being over 80% of the outstanding balance of the underlying project loans) in respect of refinance availed. In such cases, IIFC(UK) reserves the right to levy additional interest of 2% p.a. for the adverse balance period. IIFC(UK) shall allow prepayments in such cases, upto the extent of the adverse balance without charging any prepayment penalty. Alternatively, the borrowers may also substitute the existing underlying loans with fresh project loans subject to those loans being eligible under this Scheme [paragraph 2(ii)].
  6. The Refinance portfolio of IIFC(UK) shall not be more than 40% of its total advances.