FinMin wants banks, NBFCs to join hands to fund large infra projects

So far, IIFCL has sanctioned loans worth Rs 2.8 trillion, with disbursements totalling Rs 1.4 trillion, of which 50 per cent has occurred in the last 4-5 years

The finance ministry has suggested that banks and non-banking financial companies (NBFCs) increase their participation in financing large-scale infrastructure initiatives, which are crucial for India’s ambition to achieve developed nation (Viksit Bharat) status by 2047.

 

Speaking at an event organised by the India Infrastructure Finance Company (IIFCL), M Nagaraju, secretary of the Department of Financial Services in the finance ministry, said he had advised IIFCL, National Bank for Financing Infrastructure and Development, and banks to move away from secured assets and pursue new, larger infrastructure projects.

 

“There is also a need for pooling resources by NBFCs and banks so they can finance large projects,” Nagaraju said at the National Summit on Indian Infrastructure for Viksit Bharat 2047.

 

 

Nagaraju said lenders should also focus on creating world-class infrastructure projects, adding that innovative financing products should be explored. He underlined the need to focus on risk management and guard against fraud.

 

“Infrastructure projects are typically viable if there is no fraud, funds are not diverted, and timelines are adhered to. When we finance infrastructure, most projects are revenue-generating and viable if these conditions are met,” Nagaraju added.

 

So far, IIFCL has sanctioned loans worth Rs 2.8 trillion, with disbursements totalling Rs 1.4 trillion, of which 50 per cent has occurred in four to five years.

 

“In the next three years, IIFCL should lend Rs 1 trillion to fulfil the Viksit Bharat aspiration. You have the capacity, experience, and resilience to undertake very complex projects and finance infrastructure in the country,” he said. 

 

On the sidelines of the event, IIFCL managing director and chief executive officer P R Jaishankar expressed optimism that this Budget will prioritise infrastructure investment.

 

“It’s clear that robust infrastructure is essential for accelerating gross domestic product growth. As we strive for a $5 trillion and ultimately a $30 trillion economy, we must lay out a road map for world-class infrastructure,” said Jaishankar.

 

He further noted that IIFCL is growing at a 20 per cent compound annual growth rate, which will require a balanced approach to both debt and equity. “The key challenge lies in determining how to achieve this balance and the appropriate proportions, which require further examination,” he added.

 

IIFCL will continue to focus on its core infrastructure business while also exploring new areas such as sustainable infrastructure, electric vehicle charging, and battery swapping projects, Jaishankar said. He added that the company’s plans to list on the stock exchanges are still under consideration. The company had previously aimed for an initial public offering by 2024-25.

 

He further advocated for private investments in Indian Railways, which has so far remained “unprivatised”, unlike the aviation sector.

 

Jaishankar said that it is “high time” for privatisation of Indian Railways. “The time has come for private investment in Railways. So far, the government has been the major investor in infrastructure in India. The next scale of investment should come from the private sector. The animal spirits in the private sector must rise to meet expectations,” he observed.