The government is actively considering setting up refinancing fund for the power sector, which will ease the pressure on banks and other financial institutions, which are finding it difficult to finance the growing appetite of the power sector due to sectoral and group-wise limits imposed by the Reserve Bank of India (RBI).
The fund will have a corpus of Rs 50,000 crore and the concept paper on the issue is actively discussed by various concern ministries.  The fund is in the process of being formulated.  Takeout financing is what we are looking at, said power secretary P Umashankar. Takeout financing is a system designed to help banks lend to long term duration projects, such as power sector. Under the takeout financing long-term financial institutions like India Infrastructure Finance Co Ltd (IIFCL) agrees to take existing loan off the books of banks for a price, whose funds are essentially short term or medium term. Meeting the target of setting up 1.60 lakh Mw in 11th and 12th plan depends upon ability of the financial instituions to finance, country’s ambitious capacity addition programme.

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