The decision, taken in the Cabinet meeting here, would help Indian Infrastructure Finance Co (IIFCL) leverage its ability and enable the company to build a strong resource base along with higher net worth over a period of time.

"This will not have financial implications as such but will help the company in increasing its paid up capital which is necessary with the growth of the company," Chairman and Managing Director S S Kohli said.

He said the company has already asked government to raise the paid up capital to Rs 1,000 crore. It was increased to Rs 800 crore last year, he added. The Board of IIFCL has already approved the proposal.

IIFCL, a wholly-owned special purpose vehicle (SPV) floated by the government, was set up with a paid-up capital of Rs 10 crore and an authorised capital of Rs 1,000 crore.

The company assists in infrastructure development up to 20 per cent of the project cost. The funding, however, has to be less than the share of the lead bank.

IIFCL has already opened a subsidiary in London to raise valuable funds to finance the core sector in India for providing world-class infrastructure and strengthening the economy.

It can also borrow foreign exchange reserves up to 5 billion dollars from the Reserve Bank of India and lend to Indian infrastructure companies for meeting their capital expenditure for import solely outside India.