Finance Minister P. Chidambaram on Tuesday said that for Infrastructure Debt Funds (IDFs), we should try to mobilise resources from insurance and pension sectors as these funds are available for long term horizon.
Chidambaram, who was speaking after launching the maiden IDF scheme of IIFCL Mutual Fund (IDF) here today, later handed over In-Principle sanction approval letters issued by IIFCL Asset Management Company Limited (IAMCL) to one Power Project in Jharkhand and one Rural Water Project in Andhra Pradesh. Both the projects are in operational phase.
Chidambaram said that in order to give thrust to investment in infrastructure sector and to attain GDP growth rate of 8 percent, there is an immense need for financial products such as IDFs, Takeout Finance and Credit Enhancement to fill the financial gap in the infrastructure sector.
The Finance Minister congratulated IIFCL and the other participating investors of IIFCL Mutual Fund (IDF) for this landmark event of launch of the IDF scheme, which will pave the way for setting-up of more such infra debt funds.
On this occasion, Dr Arvind Mayaram, Secretary, Department of Economic Affairs, Shri Rajiv Takru, Secretary, Department of Financial Services, Shri V.P Baligar, CMD, HUDCO and CMDs of Canara Bank and Corporation Bank along with ED, OBC were also present among others.
Later IIFCL Asset Management Company Limited (IAMCL), an Asset Management Company (AMC) promoted by India Infrastructure Finance Company Limited (IIFCL) to manage the IIFCL Mutual Fund (IDF) signed a Memorandum of Understanding (MoU) with three Public Sector Banks (PSBs), including Canara Bank, Oriental Bank of Commerce and Corporation Bank and two Financial Institutions (FIs), including the IIFCL and HUDCO to launch maiden Infrastructure Debt Funds for catalysing investments by way of securitised debt instruments of Infrastructure Projects/Companies.
IIFCL Mutual Fund (IDF) has launched its maiden Infrastructure Debt Fund scheme with the support of investors viz. Canara Bank and HUDCO being the Strategic Investors and Corporation Bank, Oriental Bank of Commerce and IIFCL being the other investors. The maiden IDF scheme will mainly undertake investment in debt securities or securitized debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, SPV, Bank Loans etc. with the investment objective of capital appreciation and trade on the Stock Exchange, aimed at development of bond market in the country.
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Chairman and Managing Director of IIFCL, S.K. Goel, in his welcome address earlier said that IDF will complement commercial banks in providing the required long term funding to infrastructure sector and help in addressing their Asset Liability Mismatch (ALM) problems. He further added that IIFCL is targeting an initial corpus of USD 1 billion by attracting both domestic and international investors.
He also mentioned that IIFCL, as a premier developmental financial institution, is promoting other similar products like Takeout Finance and Credit Enhancement in its efforts in taking India's infrastructure growth story to the next level.
The regulations for Infrastructure Debt Fund, through Mutual Fund and NBFC route, were issued by the financial regulators, SEBI and RBI, following the announcement made by Government of India in financial year 2011-12.
