Project finance in essence is financing for a particular project, such as a mine, toll road, railway, pipeline, power station, ship or hospital which debt service is performed by the cash-flow of that project. Project finance is different from traditional forms of finance because the financier, as opposed to an ordinary borrowing, principally looks to the assets and revenue of the project in order to secure and service the loan. The most important process is the identification, analysis, allocation and management of every risk associated with the project.
Project finance has been increasingly employed worldwide to finance large-scale natural resource projects, from pipelines and refineries to electric-generating facilities and hydro-electric projects. Each project has its own unique risks, therefore poses its own unique challenges. In each case, the sponsors and the financiers alike, need to act creatively to meet those challenges and to effectively and efficiently minimise the risks embodied in the project in order to ensure that the project financing executed successfully.
Project Financing includes understanding the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, and raise the funds. An in-depth konwledge is required to understand the design of contractual arrangements supporting project, credit requirements and the project's borrowing capacity, cash flow projections, magnitude of expected rates of return, tax and accounting issues and analytical techniques for justifying the investment.
Since each project has its unique challenges and risks, our Bank employs vigorous efforts to ensure custom tailored approach for every project and customer in line with its overall strategy.