Rate hike not to impact borrowing cost: Tourism Fin Corp

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Rate hike not to impact borrowing cost: Tourism Fin Corp

In an interview with CNBC-TV18, Archana Capoor, Chairperson & MD, Tourism Finance Corporation gave her perspective on disbursements to the infrastructure sector.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS CNBC-TV18 Poll: Lending rates to go up in Q3 FY11 What's next for interest rates after RBI rate hike? RBI seen lifting rates at modest pace: DBS Don't see borrowing cost go beyond 9.5% in 2010: HCC RBI raises repo, reverse repo: What will happen on July 27? ALSO READ See latest News about Tourism Finance See previous management interviews See what other Experts & Brokerages are saying about Tourism Finance Tourism Finance BSE | NSE 09/02/12 Are Mutual Funds betting on Tourism Finance?

In an interview with CNBC-TV18, Archana Capoor, Chairperson & MD, Tourism Finance Corporation gave her perspective on disbursements to the infrastructure sector.

Below is a verbatim transcript. Also watch the accompanying video.

Q: You are planning an entry into infrastructure financing business and in particular you plan to start off with financing power projects - has that kicked off and what is the incremental disbursements you have seen on account of this?

A: This was reported somewhere that we were getting into power sector but nobody said that we are not talking about the traditional power or energy sector. What we have been talking about is alternative power sector. We are a small player and would be lending to two projects, along with large banks. The two projects are looking into alternative sources of energy, clean energy because that is where I think our role would be.

With regard to our business plans for this sector is, traditionally focus wise we are still a tourism company. Most of the infrastructure we are looking at from tourism point of view. So what we are targeting as far as our growth is disbursement would be more than 50% this year, including the tourism as well as the infrastructure sector. Infrastructure sector would be roughly 20-25% of our total portfolio whether it is sanctions or disbursement.

Q: There has been a rate hike on Friday, how is it likely to increase the cost of funds for you and how much are you likely to pass on? Basically how will your borrowing cost go up and how will your lending rates increase in the next quarter?

A: No, I think in that particular scenario, most of the time these kind of hike is already built-in. If you see prior to Friday most of the base rates have come into the market, starting from 6.5% going over 8%. So at least I know now very transparently that where banks are going to lend to me if I am a company which is rated much higher than the corporates.

So I don't see much impact of this rate hike as far as our borrowing is concerned. But with the transparency on base rates, I feel we would be having better negotiation with the banks. Uptil now we were not clued into that what is the minimum price at which banks can lend to institutions or companies like ours.

Secondly, in the infrastructure sector definitely we would be looking at the rates or the borrowing costs to be much lower than what we have been borrowing uptil now.