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India Infrastructure Finance Company Ltd (IIFCL) is preparing to raise a USD 1 billion foreign-currency loan from overseas investors while simultaneously negotiating an additional USD 400 million loan from the Asian Development Bank (ADB), as it expands long-term funding for infrastructure financing. The proposed borrowing, which would be the state-owned lender's largest foreign-currency loan to date, follows recent Reserve Bank of India measures encouraging overseas borrowings to improve dollar inflows. The fundraising programme also includes plans for a blended finance facility and the company's first dollar-denominated bond, strengthening its resource mobilisation strategy to support infrastructure projects across sectors.
India Infrastructure Finance Company Ltd (IIFCL) is planning to secure a USD 1 billion foreign-currency loan from overseas investors while holding discussions with the Asian Development Bank (ADB) for an additional USD 400 million loan, according to officials familiar with the matter. The financing plans, disclosed in the past week, are intended to strengthen the state-owned infrastructure lender's long-term funding base and support lending to infrastructure projects across India. If completed, the USD 1 billion facility would represent IIFCL's largest foreign-currency borrowing to date.
The proposed overseas loan is expected to have a tenure of 15 years at an interest rate below 7%. Separately, discussions with ADB are centred on a loan of around USD 400 million with a repayment period of approximately 20 years. IIFCL increased the size of its planned overseas borrowing from an initial USD 500 million after recent Reserve Bank of India measures introduced incentives for eligible foreign borrowings to encourage dollar inflows and support the rupee.
The fundraising forms part of IIFCL's broader resource mobilisation programme valued at around USD 1.6 billion. Alongside the overseas loan and ADB financing, the institution is exploring a blended finance facility worth approximately USD 600 million. It is also evaluating the issuance of its first dollar-denominated bond of around USD 100 million by the end of the year, with a likely maturity of three to five years.
The additional funding is expected to enhance IIFCL's capacity to provide long-term finance for infrastructure sectors, including transport, energy and other public infrastructure requiring extended repayment periods. Established as a Government of India-owned infrastructure finance institution, IIFCL provides long-term financial assistance for commercially viable infrastructure projects and operates as a non-banking financial company focused on infrastructure finance.
The proposed borrowing programme comes as several Indian financial institutions have accelerated overseas fundraising following the Reserve Bank of India's recent policy measures aimed at attracting foreign currency funding. According to officials, IIFCL's planned transactions are intended to diversify its funding sources while expanding its lending capacity for infrastructure development. The overseas fundraising strategy reflects the institution's continued focus on accessing long-tenure capital to finance projects that require extended repayment horizons and significant investment commitments.
Source - Reuters
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