Rs 40000 cr corpus ahead

INFRASTRUCTURE/ Inter-institutional group of banks and institutions to pool money

An inter-institutional group (IIG) of banks and financial institutions will pool their resources worth Rs 40,000 crore and target infrastructure projects relating to airports, seaports and tourism. This is expected to ensure speedy disbursement of loans and implementation of infrastructure projects.

Earlier, the IIG "" made up of key leading financial institutions such as Industrial Development Bank of India (IDBI), Infrastructure Development Finance Corporation (IDFC), ICICI Bank, State Bank of India, the Life Insurance Corporation of India (LIC), Bank of Baroda and Punjab National Bank "" with an investment corpus of Rs 50,000 crore, had made successful inroads into the power sector.

Finance Minister P Chidambaram said that they have succeeded in bringing six power projects to financial closure with another 10 projects on the verge of achieving financial closure. He is confident that this concept can be extended to other infrastructure sectors as well.

The top brass of the IIG last month announced the modalities and structure of funding infrastructure projects, laying down the norms, which will make infrastructure projects bankable and achieve financial closure.

"There is immense scope for infrastructure development in the country. Now that we have put into place the necessary mechanism to make them bankable, financial closure should not be an issue," said a senior official from a leading bank.

Senior FI officials said there are adequate funds available in the system, but the real issue is making projects bankable, whereby borrowers can service the loans.

Under the IIG, borrowers can approach any of the FIs or IDFC for appraisal of their respective project.

Projects will not be jointly appraised. The institution appraising the project will take an exposure in the project, and will contact other lenders forming part of this consortium to participate in the project funding, said a senior financial institution official. The appraising body will undertake all the necessary paperwork for assessment of the proposal.

Senior bankers said the focus on infrastructure will give a leg up to the economy.

"It will have a two fold impact. First, it will boost the investment climate in the country and secondly the core sector will be the prime driver of credit growth for the banking industry," said the chairman of a large public sector bank. This will also boost the steel and cement industry.