The government-owned infrastructure financing firm, India Infrastructure Finance Company (IIFCL), will raise infrastructure loan from banks adopting take-out financing, a route for transactions after a few years of disbursement.

IIFCL chairman, SS Kohli, said: "We have deployable funds in the region of Rs 10,000 crore and a part of this has been raised for 10-25 years. Therefore, we are in a position to offer take-out financing."

Generally, banks avoid long term infrastructure loans in order to avoid mismatch on their books and liabilities in successive years. Infrastructure projects last for over 7-15 years, while banks prefer funds for 3-5 years. Thus, banks need an agency to transfer funds for take-out financing. SBI had earlier transferred its funds to IDFC, while IDBI is supposed to have transferred funds to LIC.

Jitendra Balakrishnan, advisor to IDBI, said: "The most important factor for take-out financing to succeed is pricing of the loan. The loan pricing has to factor in new risks that could emerge at the point of loan transfer."

Take-out financing may become useful for power projects, four of which have been already approved by the Union Government. A bank can fund only 25 per cent of its net worth to infrastructure companies. Thus, banks need some helping hand to finance ultra mega power projects.

IIFCL chairman further said: "IIFCL will provide refinance at 7.85%, which banks can on-lend at 10.35%."