More capital for projects through infra debt funds

NEW DELHI: The government on Thursday set the stage for making more capital available for ports, power, road and airport projects through the infrastructure debt funds (IDFs).
While there is only one IDF that has been set up so far, the cabinet decision is expected to spur many other players to put in place the facility. Several players including State Bank of India, IDBI Bank and IDFC, among others.So far, Citibank, ICICI Bank, LIC and Bank of Baroda have announced plans to jointly set up a $2 billion fund.
The cabinet committee on infrastructure cleared a tripartite agreement that will enable the funds to buy out a majority of the loans given by banks for an infrastructure project. The IDFs are permitted to take over 85% of the exposure of banks after one year of the project. The agreement will be signed between the project developer, bank and the IDF. tnn
Besides, it also addresses the asset-liability mismatch issue of banks, which borrow most of their funds for up to two years through deposits but lend to infrastructure projects with 20-25 year terms.