Banks, other financial institutions and the newly-established development finance institution (DFI), National Bank for Financing Infrastructure and Development (NaBFID) together expected to finance at least 30 percent of the current national infrastructure pipeline, said Vivek Joshi, the secretary of Department of Financial Services (DFS).
To achieve this objective, there is a need for proactive and synergetic approach to be adopted by the banks, financial institutions and DFIs he said, adding that it is only then that the crowding of investments can be avoided and projects of national importance would be able to access timely and reasonable financing.
For the public institutions operating in this space, it is important to offer a mix of equity and debt products, on alternative terms without impacting each others business expansion, he said. "Meeting financing needs of new infrastructure products which are in sync with project realities is the need of the hour," Joshi added.
The institutional capacity to serve current and emerging projects across sub-sectors should be constantly evaluated here, he said.
'Many nations have infrastructure laws, India has policies'
Meanwhile, PR Jaishankar, the managing director of India Infrastructure Finance Company Limited (IIFCL), said that many nations have infrastructure laws and have enacted the same, while India has policies.
He said infrastructure assets are very long-term in nature and they are generational. Jaishankar added that enforceability of the concessions and procurement contacts of such assets is very important.
"Institutions which are more protective of the interests of all the stakeholders, be it the concessionaires in the private sector, investors , lenders and the public authorities in ensuring quality and price, all these things packaged into an institutional system is what an infrastructure law will comprise of," he said, adding that maybe it is time for India look at such a law as well.
There is a need to include lenders into agreements, he said, adding that concessionaire agreements are bipartite in nature at present. They are the mainstream parties and agreements should be tripartite, he said.
Jaishankar believes certain financial regulations need to be looked into for restructuring of standard assets. "This is pertaining to the RBI and we will approach them," he said.
"Today there is a termination payment system, which is housed in the public authority itself, probably delineating this termination payment system into another institution, perhaps modifying it into an insurance-based model, that is something which we are looking at and we are already in discussion with IRDA," Jaishankar said, adding that IIFCL has worked out a structure and is hoping it would take care of the project completion risk, in the form of an insurance.
(Edited by : C H Unnikrishnan)
