The union cabinet is expected to take up soon a proposal for setting up Credit Guarantee Enhancement Corporation to widen sources of capital for infrastructure financing.
India requires an investment of whopping Rs 111 lakh crore in infrastructure over the next five years to sustain a healthy economic growth, according to the report of the Task Force on National Infrastructure Pipeline (NIP).
To meet the huge funding requirement, Credit Guarantee Enhancement Corporation would be one of the tools for mobilising funds for infrastructure development. Union finance minister Nirmala Sitharaman had announced in the budget for 2019-20 that Credit Guarantee Enhancement Corporation would be set up to increase sources of capital for infrastructure financing.
To facilitate setting up, the RBI has already notified the regulation for a Credit Guarantee Enhancement Corporation. The Corporation is likely to be set up as a Non-Banking Financial Company (NBFC) with partnership of IIFCL, LIC, PFC, REC and similar other companies.
So how should an infra guarantee fund be designed? Should it be for under-construction projects, or for completed projects? How do you get insurance and pension funds to invest in infra projects? How can retail savings be brought in to invest in infra? How do you get foreign funds to invest in infra bonds?
To answer some of these questions, CNBC-TV18's Latha Venkatesh spoke to SS Mundra, former deputy governor of RBI; Sunil Shrivastava, former DMD of SBI and R Shankar Raman, director and CFO of L&T.
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