Infrastructure debt funds need to tap insurance, pension sectors: FM

NEW DELHI: Finance minister P Chidambaram has said resources should be mobilised from insurance and pension sectors for infrastructure debt funds.

“For infrastructure debt funds (IDFs), we should try to mobilise resources from insurance and pension sectors as these funds are available for a long-term horizon,” the finance minister said on Tuesday, adding that these products were necessary to give a thrust to investment in the infrastructure sector and attain annual GDP growth of 8%.

India requires $1 trillion (about Rs 59 lakh crore at current rates) in the 12th Five-Year Plan period for infrastructure development. Speaking after launching the maiden IDF scheme of IIFCL Mutual Fund, Chidambaram said the fund would pave the way for setting up more such debt funds.

IAMCL, a mutual fund promoted by India Infrastructure Finance Company Ltd, (IIFCL) signed a memorandum of understanding (MoU) with three public sector banks and two financial institutions – IIFCL and HUDCO – to launch the maiden IDF.

Canara Bank and HUDCO are the strategic investors in f the fund while Corporation Bank, Oriental Bank of Commerce and IIFCL are the other investors. The IDF scheme will mainly undertake investment in debt securities or securitised debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, special purpose vehicles and bank loans.

The objective of the investments is capital appreciation and trading on the stock exchange, aimed at development of the bond market in the country.

IIFCL chairman and managing director SK Goel said the IDF would complement commercial banks in providing the required long-term funding for infrastructure sector and help in addressing their assetliability mismatch problems. IIFCL is targeting an initial corpus of $1 billion by attracting both domestic and international investors, Goel added.