The government and Reserve Bank of India are working on opening a massive Rs 75,000 crore refinance window to provide concessional funds for infrastructure, housing and small and medium enterprises by partly leveraging the country's foreign exchange reserves.
The Planning Commission has mooted an idea to expand funding from the Reserve Bank of India to the India Infrastructure Finance Company Ltd, so that infrastructure projects can access finance at lower cost from the government-owned IIFCL.
The World Bank and India have concluded negotiations for loans worth $3.2 billion for recapitalising state-run banks and funding for the India Infrastructure Finance Company Ltd, a state-run lender to infrastructure projects.
The key to last week's revival package, in the infrastructure sector, is the two-year old India Infrastructure Finance Company Ltd (IIFCL) and the efforts of its chairman and managing director, Surinder Singh Kohli.
State-owned India Infrastructure Finance Company Ltd has tied up with Infrastructure Development Finance Company, and global equity investors Citigroup Inc and Blackstone Group to launch a $5 billion infrastructure fund.
In a note, titled 'IIFCL financing for PPP projects,' sent to Prime Minister Manmohan Singh, Ahluwalia wrote, 'It was pointed out in the meeting that the term of the current CMD (chairman and managing director) of IIFCL ends on March 10. The FS (finance secretary) had indicated that the term can be extended. Action on this front should be expedited to avoid loss of momentum.'
The Anil Dhirubhai Ambani Group-promoted Sasan Power was Rs 2,500 crore short of the roughly Rs 15,000 crore it needed to borrow for the project. Now, India Infrastructure Finance Company Ltd has agreed to lend around Rs 2,500 crore. A consortium of 12 domestic banks have already committed around Rs 12,500 crore, with State Bank of India and Power Finance Corporation leading the pack, with Rs 3,500 crore and Rs 1,800 crore respectively.
The Asian Development Bank (ADB) has approved $700 million in loans to support the Indian government's efforts to accelerate investment in infrastructure which the country requires to ensure strong economic growth.
Why do we need a bad bank, owned by the banks themselves when there are at least 28 ARCs around, asks Tamal Bandyopadhyay.
Officials asked what the point was in going through banks when the government has to give guarantees.
Delays in implementing power projects, mainly due to fuel issues, could turn Rs 1 lakh crore of bank loans into NPAs if prompt action is not taken, according to a study by KPMG.
Control over PSU banks is what is allowing the government to drive this scheme.
Shifting to a PPP model could repeat the errors of the past
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