Won’t aggressively raise loan rates even if interest rates rise: IIFCL chief Jaishankar

India Infrastructure Finance Company Ltd (IIFCL) will definitely not “aggressively” increase its lending rates in the coming days, even if interest rates in the financial system were to rise as RBI recently indicated, its managing director has said. , PR Jaishankar.

At the same time, this state-owned infrastructure lender will remain aligned with market conditions regarding interest rate movements, he added.

“I will be more competitive than the others. But I won’t spoil the price. I certainly won’t go the other way if interest rates go up. I will go with others but I have the possibility to be better than the others due to the good liquidity I have. We are not overtly concerned about rising interest rates in the system,” Jaishankar said. Activity area .

He pointed out that the IIFCL has liquidity of ₹4,000 crore which is a huge negative carry and this will be resolved in this financial year. To date, the IIFCL base rate stood at 7.1%, which matches SBI’s MCLR rate.

“Although SBI has increased its MCLR by 5 basis points, we have not done so. I still have an opportunity to cut costs by 25-30 basis points. Excess liquidity is an issue we we have to tackle,” he said.

“IIFCL has focused on liability management to support its asset growth and is fully comfortable not pursuing aggressive interest rate increases.”

Strong performance

Meanwhile, IIFCL for the financial year ended March 31, 2022 reported net profit of ₹514 crore, up 80% from net profit of ₹285 crore in the prior year.

In the financial year 2019-20, IIFCL recorded a net profit of ₹51 crore, which means that the net profit in 2021-2022 has increased more than tenfold in the last two financial years.

For the 2021-22 financial year, IIFCL – continuing its turnaround performance which started in 2020-21 – had the highest ever sanctions and standalone disbursements of ₹25,120 crore and ₹10,445 crore, respectively.

“I am convinced that we will maintain the good pace of performance this year as well. We expect sanctions to double and disbursements to more than double this fiscal year,” Jaishankar added.

Pawan K Kumar, Deputy Managing Director of IIFCL, said the infrastructure lender will seek to enter new areas such as alternative investment funds (AIFs) and green bonds to further strengthen its balance sheet.

Till March 2022, IIFCL, which was established in 2006, has been involved in 650 projects with a total expenditure of over ₹11.50 lakh crore, providing financial assistance to over 28% of PPP projects in the country.

Jaishankar also said that the IIFCL wants to enter new areas and try new products. He said the IIFCL is considering lending opportunities to infrastructure investment trusts (InVIT). In the last financial year, IIFCL invested ₹975 crore in project bonds, including ₹325 crore in bonds issued by a renewable energy InVIT.

Social infrastructure

Jaishankar also said that the IIFCL had recently obtained approval from the Reserve Bank of India to invest in trusts. This will pave the way for the IIFCL to enter trust-driven social infrastructure.

“We are looking at trusts. Only in two areas — education and health. If you really need to reach out to the grassroots, you need to consider trusts. We also won’t say no to company-initiated trusts,” he added.

Meanwhile, IIFCL is in the final round of approving a Medium-Term Growth Strategy Paper and this paper (prepared by KPMG) will be presented to the Board of Directors by the third week of June. said Jaishankar. The strategy document will focus on achieving growth through internal accruals, he noted.

Published on

May 27, 2022

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