The banking sector may not have got much direct relief in Pranab Mukherjee's budget, but a push to encourage something known as ‘take-out financing’ for infrastructure funding, led by IIFCL, could come as relief for banks looking to lend to the infrastructure space.

‘Take-out financing’ involves the securitisation of infrastructure loans where a bank will bundle its infrastructure loans and sell them to IIFCL at a pre-agreed price. 

This frees up the bank's balancesheet and allows it to lend further funds to infrastructure projects.

"The big advantage of take-out financing is that it helps manage the asset-liability mismatch," said Haseeb Drabu, chairman of J&K BANK.

While on the one hand, the scheme will allow more money to flow to the infrastructure sector, it will also help banks keep their balancesheets healthier by offloading some of the risk associated with long term loans. 

Banks typically rely on short term resources of up to 5 years to raise funds but lending to infrastructure involves long term loans, which often creates an asset-liability mismatch for banks. Thus it creates the fear of a potential liquidity crunch.

"The scheme will IIFCL is beneficial for banks," said M V Nair, CMD of Union Bank of India.

Even though there are no big sops for the banking industry in the budget but the push for take-out financing could be a big positive for the banking sector, as it will encourage banks to lend to the infra sector.