FINANCING OF PROJECTS

If\JWEST BEf\JGJ\[
10.1
~nanciallnstitutions

TYPES OF FINANCING

and Banksoffer a wide spectrumof financingoptions comprisingof both fund and

non fund based activities. Some of the key types of financing available include:

• • • • •
oil ost

Term Loan Working Capital Loan CashCredit Bill Discounting Factoring

• • • • • •

Export Finance Import Finance Equipment Bridge Loan Infrastructure Financing Commercial Paper Finance

10.2 How TO ApPLY

FOR TERM LOAN

of the Public Financial Institutions in the country as well as the State Financial Corporations have

standardized forms for application for term loans. These solicit elaborate information, inter alia, on the promoters, the company profile and history, full project details including costs, profitability and cash flows, economic justifications, government consents etc. A typical activity list from the viewpoint of the financial institutions vis a vis the project cycle is shown here.

10.2.1 ]\CTIVITY CRi\RT FOR TERM [Er'JDI~G
@he promoter has to go through the following stages while making application for term loan from Financial Institutions or Banks: • • • Promoters decide about the project and other parameters like location, raw material etc. Preliminary discussions with Fls regarding feasibility Appointment of consultants 149

2 DOCUMENTATION FOR TERM LOAN APPLICATION (2Q(n overview of the typical documentation involved in a Term Loan Application is given below: • • • • • • • • • Detailed Project Report Application form of bank duly filled in Industriallicence/SIA registration. NOCfrom State Pollution Control Board. purchase orders.2. Sanction for Power Balance Sheet.• • • • • • • • • • Preparation of Project Report and application for term loan. In-principle decision by Fls to go for detailed appraisal Appraisal by Fls Amendment of project report if required by Fls after discussions Issue of sanction letter for term loan Borrower conveys acceptance to the proposal Application for bridge loan against the term loan Promoters bring their contribution and FI makes disbursement against bridge loan Verification of title deeds by borrower to establish clear title to satisfaction of Fls Documentation for term loan including creation of security by way of mortgage and adjustment of disbursements for bridge loan against term loan. Profit & Loss Account and Directors Report for minimum 3 years Memorandum and Articles of Association Cash Budget. invoices 150 . 10. • • • Disbursement of further loan and implementation of project Commencement of commercial production Repayment of term loan as per schedule. in case of working capital borrowing Statement of Net wealth of Promoters Statement of collateral securities with their market valuation by approved valuer and copies of title deeds Copies of board resolutions authorizing execution of loan agreement and signing various documents to be submitted • Quotations.

(WBIDC) India Infrastructure FinanceCompany (IIFC) Housing and Urban Development Corporation Ltd.3 PRINCIPAL FINANCING INSTITUTIONS Q.Yn West Bengal the principal domestic Financing Institutions include the following: A. West Bengal Industrial Development Corporation Ltd. (IDFC) West Bengal Financial Corporation (WBFC) Industrial Investment Bank of India (IIBI) C. Term Lending Institutions Industrial Finance Corporation of India (IFCI) Infrastructure Development Finance Company Ltd. (HUDCO) 151 • • • • • • • National Housing Bank (NHB) National Bank for Agriculture and Rural Development (NABARD) Small Industries Development Bank (SIDBI) National Small Industries Corporation Ltd. (NSIC) Rural Electrification Corporation Infrastructure Leasing & Financial Services Limited (IL&FS) SREI Infrastructure Finance Ltd. (SIFL) . Other Financial Institutions • • • • • • • Export Import Bank (EXIM Bank) Indian Renewable Energy Development Agency Ltd. Commercial Banks: Allahabad Bank Andhra Bank ABN AMRO Bank American Express Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Centurion Bank • • • • • • • • • • • • • • • • • • • • • • Citi Bank Corporation Bank Dena bank Development Credit Bank HDFCBank HSBC Indian Bank IDBI Bank Indain Overseas Bank Induslnd Bank • • • • • • • • • • • • ICiCIBank Oriental Bank of Commerce (OBC) Punjab National Bank (PNB) Standard Chartered Bank State Bank of India Syndicate Bank UCOBank United Bank of India Union Bank of India Vijaya Bank B.10. (IREDA) Power Finance Corporation Tourism Finance Corporation of India Ltd.

Subscription to shares & debentures.Supplier's credit. Bill Discounting. Consultancy services. Finance for export oriented units. Fully owned by Govt.Project Finance & Equipment finance Established under the State Financial Corporation Act. Factoring. Channel Financing Project finance: providing credit to green-field as well as brown-field projects. Provides specialized finance for projects in infrastructure sector Types of Financing /Assistance Term Loan. Project Finance. Advisory Services etc Sectors financed: Energy. Urban & Rural Infrastructure Term Loans. Working Capital Loan. Types of finance . Working Capital Loan. service industries. develop and extend financial assistance for Renewable Energy and Energy Efficiency /Conservation Projects Indian Renewable Energy Development Agency Ltd. Preshipment credit.10. and Solar energy. refinances Indian commercial Banks and extends term credit to overseas financing institutions To promote. Guarantees. Export Credit. Infrastructure. Loan Syndication. Project Consultancy Exports Credits. 1951 to finance small and medium scale industries. Telecommunication. RBI is the centralized authority regulating and monitoring the banking system in India Provides financial assistance to industries in different sectors like Consumer goods industry.4 SNAPSHOT OF KEY INSTITUTIONS AND FINANCING PROFILES Institution Commercial Banks India Infrastructure Finance Company (IFCI) Infrastructure Development and Finance Company Ltd. Asset Credit. Loan Syndication. (IDFC) West Bengal Financial Corporation (WBFC) Industrial Investment Bank of India (IIBI) EXIMBank Brief Profile Commercial Banks can be broadly categorized into nationalized (government owned) and private banks. Underwriting. Bill Discounting. Project Finance. Forfaiting (discounting of export receivables) etc Sectors financed: Hydro energy. Wind energy. (IREDA) 152 . SEZs. heavy industries etc. Buyer's credit. IT. Working Capital Finance. Equipment Finance. Bill Discounting etc Terms loans. Transportation. Bridge Loan. Short Term Loan. Bio energy. Equipment Finance. of India and assists industries mainly in medium and large sector Finances corporates/ exporters. Tourism. Lease Finance. Industrial Parks. Equipment Finance Loan.

Equipment Finance. Bill Discounting.25%.00% in respect of Term Loan and EFS and also for other units making timely repayments 153 . Debt Refinancing. Repayment period .No limit.a.upto 9 months.25% p.No limit. Short Term Loan.9% quaterly. Bridge Loan etc Rupee Loan.15 months Interest rate -12% quarterly Amount .upto 50% of admitted claim of State Government Incentives Repayment period . (WBIDC) Provides financing for setting up and expansion of medium and large-scale industries. Long Term Loan: Amount . Repayment Period . Moratorium .No outstanding term loan Security . Maximum duration .5%. Subscription to shares/debentures.12 months Special Short Term Loan Scheme: Rebate for timely payments: Ranging from 0.Exclusive first charge on fixed assets Rate of interest . Equipment Finance. Moratorium . Merchant Banking & Advisory Services Types of fmancing: Amount .25% to 1.No limit. Rate of Interest. amount -Rs 4000 thousands Rate of Interest. Rate of Interest.Institution Power Finance Corporation Brief Profile For providing financial assistance to units in power sector Types of Financing /Assistance Rupee and Foreign Currency Term Loan. Lease Finance.upto 7 years Tourism Finance Corporation Sponsored by IFCI to finance tourism projects West Bengal Industrial Development Corporation Ltd.9.upto 18 months.9. Equipment Leasing.upto 5 years Equipment Finance Scheme (EFS): Max. based on valuation Eligibility .9 months Short Term Loan (to assisted units) Bridge Loan : Contribution depends upon the merit of individual projects Equity Participation: Amount . Repayment period .9.

airports. educational institutions. Production Credit. Investment Banking. power. Advisory Services. (NSIC) Rural Electrification Corporation Principal agency to promote Housing Finance Institutions and to provide financial and other support to such institutions Established for promotion and development of agriculture. industrial infrastructure. conservation. transmission. Debt Placement. water and tourism. Bill Discounting etc Provides Term Loan. Plant & Machinery on hire purchase and lease. aid and foster the growth of small industries in the country Financing and promoting projects covering power generation. Currently involved in power. subsidiary formed to accelerate and increase PPPs in infrastructure sector Fully owned Gol enterprise with focus on housing and utility infrastructure provision Types of Financing I Assistance Direct lending to eligible projects. Refinance to banks and (Fls). cottage and village industries. sub transmission and distribution system. (SIFL) Areas covered: Infrastructure Equipment Financing. telecommunications Refinance to housing finance companies. hospitals. Institutional Broking and Merchant Banking Infrastructure Leasing & Financial Services Limited (IL&FS) SREI Infrastructure Finance Ltd. handicrafts and other rural crafts as well as allied activities in rural areas Principal financial institution for promotion. transportation. ports. Financing housing & infrastructure projects such as water. National Bank for Agriculture and Rural Development (NABARD) Small Industries Development Bank (SIDBI) National Small Industries Corporation Ltd. urban infrastructure. Asset Finance. One of India's leading infrastructure development and finance companies One ofIndia's largest private sector NonBanking Financial Institutions financing infrastructure sector Refmance to commercial banks. debt funding. Working Capital Loan. (HUDCO) National Housing Bank (NHB) Brief Profile Wholly owned Govt. SSI. Housing Development Finance Corporation Limited (HDFC) and Unit Trust of India (UTI). pump sets.. Infrastructure Project Financing. Loan Syndication. Technical Support. banks etc.Institution India Infrastructure Finance Company (IIFC) Housing and Urban Development Corporation Ltd. financing and development of SSls Formed to promote. commercial. Investment Credit. transformers and capacitors Provides Project Finance. transmission and distribution Co-promoted by the Central Bank of India (CBI). Export Finance Financial assistance for electrification. etc Term Loan. Renewable Energy Equipment Financing 154 . Regional Rural Banks. Project Finance. Cooperative Banks. Working Capital Term Loan.

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.