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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

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

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