Hun Kim, Country Director of Asian Development Bank (ADB) informed that the multilateral lending institution is discussing with several banks on participating in the infrastructure debt fund (IDF) floated by them.
It is learnt that ADB plans to participate in the IDF floated by domestic banks through the NBFC route. The current regulatory framework allows IDFs to be floated either through the Non Banking Finance Company (NBFC) route or through the mutual fund route.
The multilateral lender has not shown interest in the IDF proposed by India Infrastructure Finance Company (IIFCL) as the latter is looking to set it up through the mutual fund route.
Meanwhile, ADB is working with IIFCL on a pilot on credit enhancement scheme. Stating that long-term debt financing is very important for infrastructure, Kim said ADB would extend support either directly to IDF or provide line of credit or extend bond support for credit enhancement.
Some weeks ago, IIFCL entered into a guarantee agreement for the first pilot under its credit enhancement scheme. The guarantee agreement was executed between IIFCL and GMR Jadcherla Expressways, paving the way for the latter to raise low cost funds, especially insurance companies, through a bond offering.
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