Date:14/12/2006 URL: http://www.thehindubusinessline.com/2006/12/14/stories/2006121402680600.htm

Back Andhra Bank signs MoU with India Infrastructure Finance

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SIXTH FOR IIFCL: From right)Mr K. Ramakrishnan, CMD, Andhra Bank; Mr Vinod Rai, Secretary (Financial Sector), Ministry of Finance; and Mr S.S. Kohli, CMD, India Infrastructure Finance Company Ltd, at a press conference in the Capital on Wednesday. - Ramesh Sharma

New Delhi , Dec 13

Andhra Bank on Wednesday signed a memorandum of understanding (MoU) with India Infrastructure Finance Company Ltd (IIFCL) to lend further impetus and purpose to its infrastructure financing activities.

The public sector bank has deployed about 20 per cent of its loan book (about Rs 23,000 crore) towards infrastructure finance.

"Andhra Bank is already part of the infrastructure growth story. Both institutions would cooperate in creating a pipeline of infrastructure projects, sharing credit appraisal skills and deploying funds in the infrastructure sector in a more meaningful manner," Mr K. Ramakrishnan, Chairman and Managing Director, Andhra Bank, said after signing the MoU here on Wednesday.

Besides creating a deal flow of infrastructure projects that could be structured along commercially viable lines, the MoU provides for cooperation in undertaking commercial due diligence and credit appraisal, syndication of funds and co-financing.

Mr Ramakrishnan and Mr S.S. Kohli, Chairman and Managing Director, IIFCL signed the MoU in the presence of Mr Vinod Rai, Secretary, Financial Sector.

Mr Kohli said IIFCL had signed six MoUs since its incorporation in January this year and another four would be signed before the end of the current fiscal.

Mr Kohli suggested that Andhra Bank should take the initiative to appraise road projects in South India and look at the possibility of earning fee-based income.

Mr Rai later told reporters that the Reserve Bank of India's move to hike cash reserve ratio (CRR) by 0.5 per cent in two stages would not affect the profitability of banks. "No impact on profitability of banks," he said.

The senior Finance Ministry official also said that the transfer of RBI's shareholding in State Bank of India to the Government would be "budget neutral" and indicated that the transaction may happen next fiscal.