Among the plethora of funds announced by former Finance Minister Jaswant Singh, the Rs 50,000 crore (Rs 500 billion) Infrastructure and Manufacturing Fund, is still in a limbo.
Even the other two sector-specific funds for agriculture and small and medium enterprises, with a combined corpus of Rs 60,000 crore (Rs 600 billion), have sanctioned loans worth just over Rs 1,000 crore (Rs 10 billion) since they were announced in January this year.
Bankers are closely monitoring the fate of the Rs 110,000 crore (Rs 1,100 billion) sectoral funds announced by the National Democratic Alliance government in January. Chances are that the funds will be reworked.
But bankers acknowledge that none of the funds have really served the purpose for which they were set up.
The schemes were essentially populist measures and involved little more than repackaging existing schemes.
For instance, the JPNF was formed by converting the Rural Infrastructure Development Fund and using the corpus. "The focus changed a little from mainly infrastructure projects like roads to include investment credit as well," said a senior executive with Nabard, which was entrusted with the responsibility of operating the fund.
Of the Rs 50,000 crore (Rs 500 billion) corpus under JPNF, Rs 30,000 crore (Rs 300 billion) was set aside for infrastructure projects, including irrigation, while Rs 18,000 crore (Rs 180 billion) was earmarked for investment credit to improve the storage network and create cold chains, and the remaining Rs 2,000 crore (Rs 20 billion) was the calamity relief corpus.
As for the SME Fund, Small Industries Development Bank of India has so far sanctioned assistance of around Rs 800 crore (Rs 8 billion). The corpus would be created through a contribution of around Rs 4,000 crore (Rs 40 billion) from Sidbi and the implementing agency hoped to garner around Rs 1,200 crore (Rs 12 billion) from foreign banks which have not met their priority sector lending requirements.
The remaining corpus was proposed to be raised through priority sector and capital gains bonds, external commercial borrowings and multilateral assistance.
Sidbi is undertaking direct lending at 9.5 per cent, 2 per cent below its prime lending rate, while funds are being made available to SFCs at 7.5-8 per cent.
Apart from IDFC, the infra and manufacturing fund has State Bank of India, IDBI, LIC, ICICI Bank, Bank of Baroda and Punjab National Bank as the initial agencies for sanction and disbursal.
The agencies involved with the fund would not be required to chip in with any contributions to start with, and funding, that was to be based on a proposal submitted by companies and banks, would take an exposure depending on their individual appetite.
The government was to provide a 2 per cent interest subsidy, or fund the viability gap, since the banks and institutions were to provide loans at 2 per cent below their prime lending rates.
"Unlike the funds for SMEs or JPNF, there is no clear-cut mechanism for lending for infrastructure. So the entire scheme remains vague and therefore there is no lending," said the head of a public sector bank.
While announcing measures to improve credit flow to agriculture, even Finance Minister P Chidambaram acknowledged the problem saying there were no funds for the funds.
Powered by 
