FICCI demands institution to finance infrastructure sector

MUMBAI: FICCI has reiterated its demand to set up an exclusive banking institution on the lines of National Housing Bank ( NHB) and Power Finance Corporation ( PFC) for catering to financing needs of infrastructure sector, an official said.

"Last year, we had suggested the government allocate Rs 5000-crore to set up such a banking institution, but we have not got any response so far," Federation of Indian Chambers of Commerce and Industry (FICCI) Executive Committee Member and Binani Group of Industries MD Vinod Juneja said.

"Infrastructure is a sector, where loan payback or maturity period is as high as 20 years, while the average commercial bank's loan maturity period is merely three to five years. Therefore, there is a need to set up a banking institution to finance the infrastructure sector specifically," Juneja said.

Stressing the need to understand construction sector in the Indian context in terms of cash flow and loan repayment, he said "the government ought to change present NPA norms of banks for construction sector".

The construction sector is at a huge disadvantage due to a negative perception which has prevented banks from advancing loans, Juneja said.