(The following press release from ICICI Bank was received by e-mail. It
was not confirmed by the sender.)
1. The Honourable Finance Minister, Shri P. Chidambaram today launched the
operations of India Infradebt Limited (Infradebt), the first Infrastructure
Debt Fund (IDF) under the NBFC structure by handing over the first IDF -
NBFC license to Infradebt in presence of the promoters, ICICI Bank, Bank of
Baroda, Citibank and LIC.
2. ICICI Bank (together with a wholly-owned subsidiary) is the largest
shareholder in Infradebt with 31% holding followed by Bank of Baroda at 30%,
Citibank at 29% and LIC at 10%. Infradebt would seek to raise debt capital
from domestic as well as foreign resources and would invest in
infrastructure projects under the Public-Private Partnership model that have
completed one year of operations. Infradebt will expand and diversify the
domestic and international sources of debt funding to meet the large
financing needs of the infrastructure sector, thereby giving an impetus to
the creation of the infrastructure necessary to drive India's growth.
3. Speaking on this occasion, the Honourable Finance Minister
emphasized the need to meet the financing requirements of the
Infrastructural deficit. Infrastructure spending in the 12th five year plan
is projected at USD 1 trillion against about USD 500 billion in the 11th
five year plan. The share of private investment in the total investment in
infrastructure has increased significantly from 22 per cent in the Tenth
Plan to 38 per cent in the Eleventh Plan and is projected at 47 per cent
during the Twelfth Plan.
4. Financing investments of this order with significant
participation from the private sector will require adoption of innovative
ways of financing.
. The Government has initiated several major steps in
this direction. Some of these steps are summarized as under:
(a) The Government has set up the Cabinet Committee on Investments (CCI)
with the Prime Minister as the Chairman to expedite decisions on
approvals/clearances for implementation of projects. This is likely to
improve the investment environment by bringing transparency, efficiency and
accountability in accordance of various approvals and sanctions.
(b) The Government is also promoting Public Private Partnerships (PPPs)
as an effective tool for bringing private sector efficiencies in creation of
economic and social infrastructure assets and for delivery of quality public
services. The Viability Gap Funding Scheme has been further strengthened by
adding many new sectors like modern storage, education, health, irrigation
(c) One major problem faced by banks while disbursing loans to
infrastructure projects is the asset liability mismatch inherent with these
projects. Therefore many such projects are denied financing by banks. IDFs
through innovative means of credit enhancement is expected to provide
long-term low-cost debt for infrastructure projects
(d) The cost and tariff of Infrastructure services are likely to go down as
a result of low cost long term debt provided by IDFs. Further, buy-out
guarantee from Project Authority will enable IDF-NBFC to maintain zero NPAs.
The taking over of existing bank debts by IDFs will release an equivalent
volume for fresh lending by banks to infrastructure projects.
(e) The Government has also allowed the issue of Tax Free Bonds amounting
to Rs. 54,500 crore for the FY 2012-13, doubled from Rs. 30,000 crore in FY
2011-12. These bonds would mobilize much needed long-term funds for the
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