Banks must hand over their loan for infrastructure projects to Infrastructure Debt Funds (IDFs) once the projects are completed so that banks can get funds to lend to fresh projects.
Finance Minister P Chidambaram suggested this to banks recently. IDF provides long term finance through the lifecycle of the project, the minister said. I appeal to banks to recognise the importance of the new instrument (IDF) that the government is introducing and acknowledge the complementary role of the banks and the IDF, he said.
He remarked that the sooner the bank releases loan to IDF, they will be able to lend to more projects. An IDF steps in after the project is completed and starts operating. It takes over the loan portfolio from banks by paying them a small premium on their exposure.
However, bankers are of the view that when it is time to reap rewards from a project, there is no reason why should they hand over the loan to a third party such as an IDF.
He stressed on the need to build world class roads, railways and ports. He said he hoped that the idea of IDF will help in making Indian infrastructure world class.
He also pointed out the need to raise half of the anticipated investment in infrastructure in the twelfth plan period (2012-17) of $1 trillion.