Project Financing

in India

By Shruthi D P
Shruti Tolanur
Project Financing

Project financing refers to the means of

finance employed for meeting the cost of
project. - Prasanna Chandra

Project finance is a method of financing very

large capital intensive projects, with long
gestation period, where the lenders rely on
the assets created for the project as security
and the cash flow generated by the project as
source of funds for repaying their dues.
 Project Financing contd…
Project finance is essentially financing on the security of
the project itself, with limited or no recourse against the
sponsors of the project or other parties involved in the
development and implementation of the project.

Due to such characteristics of project finance, the loans

sought by the borrowers are always approved by the
lenders on the basis of strong in-house appraisal of the
cost and viability of the ventures as well as the credit
standing of project promoters.
Means of Finance
• The long term source of finance for
meeting the cost of project
– Equity Capital
– Preference Capital
– Non convertible Debentures
– Convertible Debentures
– Rupee Term Loans
– Foreign currency Term Loans
– Euroissues
Means of Finance contd…
– Deferred credit
– Billing rediscounting scheme
– Suppliers line of credit
– Seed capital assistance
– Government Subsidies
– Sales tax deferment and exemption
– Unsecured loans & deposits
– Lease and hire purchase finance
Norms and Policies of
Financial Institutions
• Raising of Resources
• Exposure Norms
Thank You