Loan For Infrastructure Projects

  • Infrastructure projects are often financed through Special Purpose Vehicles. Financing of these projects would, therefore, call for special appraisal skills on the part of lending agencies.
  • Identification of various project risks, evaluation of risk mitigation through appraisal of project contracts and evaluation of creditworthiness of the contracting entities and their abilities to fulfill contractual obligations will be an integral part of the appraisal exercise. In this connection, banks/FIs may consider constituting appropriate screening committees/special cells for appraisal of credit proposals and monitoring the progress/performance of the projects.
  • Often, the size of the funding requirement would necessitate joint financing by banks/FIs or financing by more than one bank under consortium or syndication arrangements. In such cases, participating banks/ FIs may, for the purpose of their own assessment, refer to the appraisal report prepared by the lead bank/FI or have the project appraised jointly.
  • A detailed Information Memorandum (IM) prepared by the Project Appraising authorities covering various aspects of the project viz., profile of the promoters, management profile, type of product manufacturing (in case of manufacturing activity), locational advantages, permissions from various statutory authorities, hard cost, soft cost, project out lay, debt component, promoters contribution, project time lines, Date of Commencement of Commercial Operations, technical and financial viability etc shall form the basis for assessment.
  • Relative project assets created/purchased from out of term loan & the promoters’ share of investment shall be the primary security & the promoter’s contribution towards
  • Project funding shall be the margin.
    The lending will be generally in the form of consortium/syndication.
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