Takeout Finance Scheme (TFS)

TFS was launched on 12th October 2010 by the Union Finance Minister wherein MoU between India Infrastructure Finance Company Ltd( IIFCL) and PNB, Allahabad Bank, Union Bank, Indian Bank & UCO Bank was signed.

Take out finance is a mechanism designed to enable Banks/ Lenders to avoid asset liability mismatch that may arise out of extending long tenor loans to infrastructure projects. Under this arrangement, Banks that extend credit facility to infrastructure projects enter into an arrangement with a financial institution for transferring the loan outstanding in the Banks books to the books of the financial institution who take out the loan.

Broad features and advantages of TFS :
1. Enhances the availability of long tenor debt finance for infrastructure projects

2. It enables availability of cheaper cost of finance available for the borrower

3. Addresses sectoral / group / single party exposure issues of Banks/ Lenders who are providing long term debt financing to infrastructure projects.

4. Addresses Asset-Liability mismatch (ALM) of Banks arising out of financing infrastructure projects and also to free up capital for financing new projects.

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