Govt, RBI agree over setting up SPV for infra projects: Bansal
Government and RBI have agreed that the proposed special purpose vehicle for using a part of forex reserves for infrastructure projects will be a non-deposit taking wholesale bank.
By PTI |
NEW DELHI: Government and RBI have agreed that the proposed special purpose vehicle for using a part of forex reserves for infrastructure projects will be a non-deposit taking wholesale bank located in well-regulated jurisdictions like Singapore or London.
However, the issue whether the financing of infrastructure projects would follow refinance route or investment route is still under discussion between the Finance Ministry and the RBI, Minister of State for Finance P K Bansal told Rajya Sabha in a written reply.
Using five billion dollars a year from the country's foreign exchange reserves for funding infrastructure projects is part of the recommendations by Deepak Parekh Committee. India's forex reserves stand at around 270 billion dollars, and the government estimates the country's infrastructure would need over 450 billion dollars in the next few years.
Government alone cannot provide the massive finance required to fund all infrastructure projects, Bansal said.
The time frame for the implementation of this suggestion will be announced once a decision is taken on the modalities by the government in consultation with the RBI, he said.
The Deepak Parekh Committee has suggested establishment of two wholly-owned overseas subsidiaries of IIFCL. One of these subsidiaries was proposed to borrow funds from the RBI and lend to Indian companies implementing infrastructure projects, or to co-finance their overseas borrowings for such projects solely for capital expenditure outside India.
The other subsidiary was proposed to borrow funds from the RBI, invest them in highly rated collateral securities, and provide 'credit wrap' insurance to infrastructure projects in India for raising resources abroad.
However, the issue whether the financing of infrastructure projects would follow refinance route or investment route is still under discussion between the Finance Ministry and the RBI, Minister of State for Finance P K Bansal told Rajya Sabha in a written reply.
Using five billion dollars a year from the country's foreign exchange reserves for funding infrastructure projects is part of the recommendations by Deepak Parekh Committee. India's forex reserves stand at around 270 billion dollars, and the government estimates the country's infrastructure would need over 450 billion dollars in the next few years.
Government alone cannot provide the massive finance required to fund all infrastructure projects, Bansal said.
The time frame for the implementation of this suggestion will be announced once a decision is taken on the modalities by the government in consultation with the RBI, he said.
The Deepak Parekh Committee has suggested establishment of two wholly-owned overseas subsidiaries of IIFCL. One of these subsidiaries was proposed to borrow funds from the RBI and lend to Indian companies implementing infrastructure projects, or to co-finance their overseas borrowings for such projects solely for capital expenditure outside India.
ADVERTISEMENT
The other subsidiary was proposed to borrow funds from the RBI, invest them in highly rated collateral securities, and provide 'credit wrap' insurance to infrastructure projects in India for raising resources abroad.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
