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videos | IST

How IL&FS lost the plot in infrastructure funding

Mini

After Infrastructure Leasing & Financial Services (IL&FS) defaulted on debt repayments, sources privy to the developments told CNBC-TV18 that it takes around 15-20 years for infrastructure projects to become financially self-sufficient and Indian banks do not provide those kind of loans for that long period of time.

After Infrastructure Leasing & Financial Services (IL&FS) defaulted on debt repayments, sources privy to the developments told CNBC-TV18 that it takes around 15-20 years for infrastructure projects to become financially self-sufficient and Indian banks do not provide those kind of loans for that long period of time.
The maximum loan that Indian banks provide is for about 8-10 years and following that projects are usually refinanced and refinancing in the country has stopped about 2-3 years ago, sources said.
Also, IL&FS has stopped funding for BoT (build–operate–transfer)
loans about three years ago and the board of directors, the independent directors were aware of the situation.
Sources tell CNBC-TV18 that last three years there have been at least three attempts to put the house in order.
1: IL&FS board was in talks with Ajay Piramal group, but plan failed.
2:  There were futile attempts to sell assets to Lone Star, but that did not materialise.
3: IL&FS board even tried to bring in an IPO, even that did not work out either.
So, lot of options were tried, but there was really no way out and the board was aware about the situation all through and what we need to do is seriously look at the infrastructure funding model that we have in India.