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Informist, Thursday, May 7, 2026

 

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--IIFCL MD: Have decent pipeline of infra projects for financing
--CONTEXT: IIFCL MD Rishi's comments in an interview with Informist
--IIFCL MD: To focus on hospitals, social infrastructure, urban development
--IIFCL MD: Don't see a lot of impact on infra lending due to West Asia war
--IIFCL MD: Confident of crossing INR 1 tln loan book size in FY27
--IIFCL MD:Removal of dual regulation to give more freedom to grow loan book
--IIFCL MD: Loan book size topped INR 820 billion end March 
--IIFCL MD: Sanctioned loans worth INR 580 bln FY26, disbursed INR 300 bln 
--IIFCL MD: See loan disbursements grow 20% in FY27 over INR 300 bln in FY26
--IIFCL MD: See 30% growth in FY27 loan sanctions over INR 580 bln in FY26
--IIFCL MD:Forming all policies around RBI's proposed upper layer NBFC norms
--IIFCL MD: To comply with RBI's upper layer NBFCs norms, once implemented
--IIFCL MD: Comfortable if LCR is above 100%, don't want to keep idle funds 
--IIFCL MD: Faced mark-to-market losses on FX exposures in Jan-Mar
--IIFCL: To raise $1 bln from Multilateral Invest Guarantee Agency by end Jun
--IIFCL MD: Plan to raise funds through maiden overseas bond issuance FY27
--IIFCL MD: May raise funds from Japanese market at opportune time
--IIFCL MD:Evaluating various mkts, looking for most cost effective currency
--IIFCL MD: Open to raising funds via green bonds, capital gains tax bonds
--IIFCL: Plan to raise up to INR 350 bln FY27, raised INR 150 bln in FY26
 

 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI – Unshackled by the removal of the Scheme for Financing Viable Infrastructure Projects by the government in April, state-owned India Infrastructure Finance Co. Ltd. is hopeful that it will be able to now underwrite the large projects on its own, Managing Director Rohit Rishi and Deputy Managing Director Palash Srivastava told Informist in an interview. 

 

"SIFTI (Scheme for Financing Viable Infrastructure Projects) put some additional limits on our operations. For example, we were not allowed to lend more than 20% of the project cost. This type of restriction has now been removed," Rishi said. "It made sense when the company was incorporated. But now, when it has proved itself to be a good institution to lend to infrastructure, the government has thought there is no point in keeping this under dual regulation," he said.

 

"For us to be commercially viable, we have to have a level playing field in terms of raising our resources and also pushing our business on credit," Srivastava told Informist. "Now, we can also act as solo lenders to some of the projects which were not allowed at all under SIFTI," he said. "We can underwrite the full exposure or share with other banks, as per our discretion," he explained. 

 

IIFCL is a wholly-owned government company established in 2006 to provide long-term financial assistance to viable infrastructure projects. In September 2013, IIFCL was registered as a non-banking financial company – infrastructure finance company with the Reserve Bank of India and follows the applicable norms of the central bank.

 

Rishi said IIFCL has a strong pipeline of lending projects over the next several months, which gives management confidence of achieving a loan book size of INR 1 trillion in 2026-27 (Apr-Mar). The company will focus on hospitals, social infrastructure, and urban development. As of Mar. 31, the company had crossed a loan book size of INR 820 billion.

 

"There are investments coming in roads and monetisation of assets by way of Infrastructure Investment Trusts. Our focus areas are now hospitals, social infrastructure, and urban development. The government has also come out with an urban challenge fund, and in the shipping and maritime sphere, there is a maritime development fund. Substantial outlay is there. Shipbuilding is another area that we are taking seriously," he said.

 

In the current financial year, the company expects a 30% growth in sanctions over INR 580 billion done in FY26. The disbursement is likely to be 20% higher than INR 300 billion in FY26, Rishi said. This means the company's sanctions and disbursements can touch INR 754 billion and INR 360 billion, respectively. 

 

To fund these projects, the infrastructure lender intends to raise up to INR 350 billion, which is significantly higher than INR 150 billion in FY26. The funds will be raised through a mix of various instruments, including domestic and overseas bond issuance. "We have got approval from the Multilateral Investment Guarantee Agency, which is a World Bank arm, to guarantee loans to be raised by IIFCL. It is about $1 billion," Rishi said. The funds are expected to flow in within the June quarter, he added.

 

Rishi, with over three decades of experience in the banking and financial services sector, joined IIFCL at its helm in January 2026. Earlier, he served as executive director at Bank of Maharashtra and held key positions in Indian Bank as well. 

 

Below are edited excerpts of the interview:

 

Q. IIFCL plans to achieve a loan book of INR 1 trillion in FY27. Given the global headwinds, how confident are you of meeting that target?

A. Irrespective of whatever has happened around the globe in the last two years, India has shown its resilience. The government, institutions and entrepreneurs are committed to building good-quality infrastructure. Core segments of infrastructure, including in renewables, a lot of investments are there.

 

We do have a decent pipeline of projects. There are investments coming in roads and monetisation of assets by way of Infrastructure Investment Trusts. Our focus areas are now hospitals, social infrastructure, and urban development. The government has also come out with an urban challenge fund, and in the shipping and maritime sphere, there is a maritime development fund. Substantial outlay is there. Shipbuilding is another area that we are taking seriously.

 

These measures and outlays are already announced, and modalities are being worked out. So, I don't think there is going to be a lot of impact on the development of infrastructure in India. That story is going to continue. Due to the disruptions, there may be some minor hiccups here and there, but then the government is very proactive. Good infrastructure is like a backbone around which various segments of the economy flourish. I don't think there is going to be any slowdown.

 

And as regards IIFCL, we are intending to close its INR 1 trillion book. We are within striking distance of that, and we have some healthy pipeline of projects.

 

Another good thing that has happened is the removal of SIFTI (Scheme for Financing Viable Infrastructure Projects) by the government last month. Earlier, IIFCL was under dual delegation. One was the central government's SIFTI, which was rolled out at the time of incorporation of this company in 2006. Later on, it came under RBI regulation in 2013.

 

SIFTI put some additional limits on our operations. For example, we were not allowed to lend more than 20% of the project cost. This type of restriction has now been removed. It made sense when the company was incorporated. But now, when it has proved itself to be a good institution to lend to infrastructure, the government has thought there is no point in keeping this under dual regulation.

 

RBI regulation is good enough to take care of the overall resilience and strength of any financial sector organisation. That's why, now, we are under RBI regulation. In fact, it means that we will have more headroom, more operational freedom to grow our book. I am quite confident that during this current financial year, we will be able to cross that mark.

 

Q. What was your loan book by the end of March?

A.  We are around INR 820 billion by the end of March.

 

Q. Can you give us the disbursement and sanction figure for FY26? What is your projection for FY27?

A. For FY26, sanctions were around INR 580 billion and disbursements were roughly around INR 300 billion.

 

In infrastructure sector, once projects get constructed and a regular revenue stream starts coming, there are tendencies to get them funded by way of bonds. What it means is, term loans get repaid. Or if companies go for listing, or they go for Infrastructure Investment Trusts, in that process the term loan liability also gets repaid.

 

This year, we are aiming to increase our disbursements by around 20%. That's what we have been doing in the last couple of years.

And to improve our profitability, what we are trying to do is, we have a refinancing segment where we are doing refinances for other infrastructure lending institutions like PFC, REC. So, we are consciously trying to reduce that refinance book. So that we are more into core infrastructure direct lending, where we become part of the creation of core infrastructure assets. And of course, in the process, we will have better profitability as well.

 

Q. So you expect sanctions to go up by 20% too in FY27?

A. Generally, if disbursements are to be 20% higher, we have to aim for around 30% growth in our sanctions.

 

Q. RBI also proposed new norms for critical infrastructure lenders or upper-layer NBFCs. How do you see those two norms impacting you in future once they are introduced?

A. We are forming all our policies. Now, after the removal of SIFTI, we are going to rewrite all our policies and all our products. We are designing all our policies around those upper-layer NBFC norms themselves. So that when they become applicable, we won't have any problem complying with them. We are adequately capitalised; capital adequacy is good.

 

The only thing is, under the new RBI-proposed norms, there are ceilings on per-borrower and per-group exposure. In the case of one or two groups, we may have to curtail our exposure. But by and large, we are compliant with all the upper layer NBFC guidelines. So, it is not much of a challenge for us to start complying with those.

 

Q. And what will be the roadmap, or what will be the strategy to bring it down?

A. It will come down in the normal course of repayment over the next one year. I am sure the RBI will also provide some timeline to come out because this problem will be faced by all the NBFCs which are so far in the middle layer and are going to become part of the upper layer. So, by way of regular repayments itself, it will come down.

 

Q. IIFCL's Liquidity Coverage Ratio has sharply come down from 234% to 103%. Is that a cause of concern, or is that normal course of business?

A. LCR, if you look at the type of business we are doing, we are not reliant on government deposits. LCR basically is a ratio to take care of the retail depositors and to give an idea to the market what will be happening in case there are some adverse macroeconomic developments. Our regulatory requirement is 100%. Above 100% means the company will be able to take care of its short-term outflows.  

 

IIFCL's LCR for the year 2026 is 113.80%. So, if you look at infrastructure as a sector, our source of funds are not retail depositors. These are multilateral banks, bond markets, and most of them are long-term sources.

 

So, the relevance and sensitivity of LCR in the context of our business model is not as significant as it is in the case of commercial banks. And LCR always comes at the cost of the profitability of any financial organisation. So, if the RBI mandates that any financial organisation should have an LCR of above 100%, we are comfortable if it is above 100%.

 

If LCR is very high, then in fact I feel that we are sacrificing some of the profitability to maintain that type of LCR. We are then keeping some idle funds without deploying them. So, we are comfortable; we are trying to deploy our funds properly so that we get the maximum return on those funds. As long as it is above 100%, we are comfortable.

 

Q. In terms of profitability, how was the performance at the end of FY26?

A. It is under audit. So, let the numbers come once the audit is completed.

 

This year there was a lot more volatility in the foreign exchange market. Most financial institutions have faced mark-to-market losses on their FX exposures. We are also not an exception to that. Due to that, there may be some hit. But overall, if you see the fundamentals, the non-performing assets percentage is going to be reduced when compared to December figures. We will have the figures very shortly, maybe in a couple of weeks. Both gross and net NPAs are going to be reduced. Efficiency ratios are going to be better.

 

Q. While your business is more on the lending side, at some point in time, would you also want to foray into the insurance side of infrastructure financing?

A. Not exactly in the near future, but there is a relationship between infrastructure lending and insurance. Because these assets are long-term assets and they are national assets. So, they are exposed to various types of climatic risks. They are exposed to various types of other geopolitical risks or natural disasters. To guard these assets against all those risks, insurance plays a vital role. And what we have been doing recently is that, while insurance is done by our Indian insurance companies, we are insisting on comprehensive assets so that all the possible sources of loss get covered and backed.

 

Additionally, there is one reinsurance business which is being undertaken by some global agencies, like Swiss Re. So, we are in talks with them. We are working on how we can make reinsurance a consistent feature of the Indian insurance ecosystem. We are trying to play that catalytic role so that economic capital is preserved and the value of these assets is retained.

 

Besides that, there was a proposal in the budget to set up an infrastructure guarantee fund to take care of construction period risks. The modalities for this arrangement are being worked out by the Department of Financial Services; we are also providing our input on how these funds can become more effective and more attractive for both developers and lenders. I do feel that, in the context of the development of such a fund also, this reinsurance can play a vital part, because some of the constructional risk may be covered by the reinsurance of such assets. So, we are trying to act as a bridge between reinsurance agencies, insurance agencies, developers, and the government.

 

Q. In terms of borrowing, what are the instruments that you will be looking at for raising funds?

A. We have got approval from MIGA (Multilateral Investment Guarantee Agency), which is a World Bank arm, to guarantee loans to be raised by IIFCL. So, we are the first institution in India which has got this MIGA guarantee approval. It's about $1 billion.

 

So, operational modalities are being finalised. We have a bucket of projects against which we will be deploying such funds. Then we are thinking of raising some funds through the domestic bond market. We are also exploring how we can raise through overseas bonds, which we have not done so far. Of course, it will depend on the exchange rate volatility and the hedging costs. We are making all those comparisons. But we are exploring such avenues which, so far, we have not explored for long-duration bonds.

 

We are now trying to see whether we can raise from Japan. Whether we can raise 20-year or 30-year bonds. Some of the development financial institutions in India have done that. Apart from that, the domestic bond market and domestic credit lines from various lenders are also going to be another source.

 

Q. So, what sort of interest are you seeing from the yen market? Because your peers like REC and PFC have been very interested in the yen market, and they have already raised funds. How optimistic are you about being able to raise funds from the yen market?

A. We did get good interest from Japanese investors. But the only thing is, due to these geopolitical uncertainties, Japanese investors are very conservative in nature. So, they tend to play very safe. But they are very much interested in India's growth story. And they do look at India as one of the major magnets of investment.

 

Where they can get a reasonable return on their investment. But at an opportune time, I think we will hit the market. Let's see during this current financial year, we will raise something from the bond market. And we will evaluate where it is most cost-effective for us. Whichever currency is most cost-effective.

 

Q. Would you like to raise funds via green bonds, zero-coupon bonds and 54EC bonds?

A. Yes, we are open to them. What matters is the cost at which we can borrow. We will go for the ones that can help us make money.

 

Q. Overall, how much money are you looking to raise this year?

A. This year, we have approved plans to raise around INR 350 billion.

 

Q. Last year, how much did you raise?

A. Last year, our actual raise from the market was around INR 150 billion.

 

Q. Where are we on an initial public offering? Because the Cabinet has given its approval, what sort of timeline are we looking at for the IPO?

A. All that is to be decided by the government. It should come within this financial year; I am optimistic.  End

 

Edited by Vandana Hingorani

 

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