India's largest private-sector lender ICICI Bank said its private equity arm–ICICI Venture Capital Fund—-would set up an infrastructure equity fund. It had also called for measures to enable higher infrastructure financing by banks, say reports.
On the sidelines of a conference on state highways on Monday in New Delhi, ICICI Chief Executive Officer & Managing Director Chanda Kochhar said infrastructural lending by banks had risen to $67 billion from $2 billion in the last 10 years, adding that the debt requirement could be as high as $500 billion during the 12th Five Year Plan (2012-17).
ICICI Bank has advanced Rs.12,000 crore for state highway projects since its inception 55 years ago. Of this, its own money was Rs.5,000 crore and the rest was secured through syndication with other banks, she said.
Calling out for measures that would enable higher infrastructure funding by banks, Kochhar said India's road network–which carries 80 per cent of its passenger and 65 per cent of its freight traffics–was of national importance.
Kochhar said bankers should be allowed to issue tax-free infrastructure bonds, as these would be a very cost-effective source for the banks to actually provide long-term cost-effective financing to infrastructure projects.
If the Statutory Liquidity Ratio (SLR) and the Cash Reserve Ratio (CRR) requirements on these bonds are reduced, cost of funding for infrastructure projects can be brought down, she said.
Priority sector classification for infrastructure funding can also go a long way in making a lot of funds available to these projects, she added.
Source: RTT News