Jyoti Mukul

New Delhi: India Infrastructure Finance Company Ltd (IIFCL) has put on hold its plans for setting up one of the two special purpose vehicles (SPV) for leveraging the country’s foreign exchange following the Reserve Bank of India’s (RBI) reservations.

It has already registered one SPV in London for granting foreign currency loans to companies that are putting up infrastructure projects in the country.

The London-registered SPV is now awaiting government guarantee after which the RBI would release the first tranche of $250-million foreign exchange reserves to it, said a senior government official.

“Lending from this SPV could be used even for putting up ultra mega power projects,” the official said.

The SPV that has been kept in abeyance was to borrow funds and invest in highly rated collateral securities and provide “credit wrap” insurance to infrastructure projects in India for raising resources in international markets.

The RBI,which is the regulator of country’s foreign exchange reserve running into some $281.7 billion (about Rs 11,07,009 crore), had earlier expressed doubts that investing in such a SPV would create wrong precedence as it has to deal with many more such proposals.

Sources told DNA Money that there were apprehensions in floating this SPV since the requirement of forex would be “huge”.

There was no clarity as yet on leveraging the country’s burgeoning foreign exchange reserves for either this SPV or for creation of so called “sovereign” fund for acquiring energy assets overseas.

Source : DNA