Government-owned Indian Infrastructure Finance Company (IIFCL) is likely to offer credit enhancement scheme from July. Company board has already approved the scheme and will soon meet the infrastructure secretaries in ministry of fina-nce to get their views on it.

“The scheme is in final stage. The board has approved it. Now we will meet the infrastructure secretaries shortly to get their views and fine tune it as the need be. I think we’ll be able to launch it by July,” SK Goel, chairman and managing director (CMD), IIFCL said. Under credit enhancement product, IIFCL will give partial guarantee to the infrastructure companies so as to help them improve their ratings for bond issues. To begin with, IIFCL will have either Rs 2,000 crore or Rs 5,000 crore to put in the scheme. It will guarantee only up to 50 per cent of the fund required for improving an infrastructure company’s rating to ‘AA’ and above. “The scheme will not be open for everyone. Amount of guarantee will not exceed more than 50 per cent of the required fund. Gradually, we’ll put in more money in scheme,” Goel said.

The infrastructure funding institute has tied up with World Bank and Asian Development Bank to re-insure the guarantee given by it to infrastructure companies. The multilateral funding agencies will re-insure 50 per cent of guarantee offered by IIFCL.

In return, IIFCL will get 50 per cent of the savings that infrastructure companies will have in interest rates through bond issue. “For instance, if a company saves 2 per cent on interest cost, we’ll get one per cent of it. The minimum fee would be 75 basis points,” he said.

Similarly, ADB and WB will get 50 per cent of what IIFCL will receive from the infrastructure companies, depending on the re-insured amount.