Kolkata, Sep 17 (UNI) Revival of PPP model and alternative funding, like InvITs and credit enhancements, after the exit of PSU banks from infrastructure lending, are the way forward for infrastructure development of the country.
The PSU banks have moved away from infrastructure lending, owing to the asset-liability mismatch in their balance sheets and tightening of the RBI norms, a senior official of IIFCL said here on Saturday at a panel discussion on India's Infrastructure Needs at MCCI Economic Forum.
"The average maturity period of deposits with PSU banks is five years, whereas they need to fund infrastructure projects for 20-25 years, which has caused the asset-liability mismatch in their balance sheets, causing piling up of NPAs," the official said.
Faulty project appraisals were also cited by RBI for the rising NPAs of the PSU banks and as many as 11 PSU banks went under the central bank's scanner under its Prompt Corrective Action (PCA) framework, he added.
The senior official said that IIFCL was spearheading credit enhancement scheme for the government.
"While bank deposits have a lower maturity period, pension insurance schemes have a longer maturity period and are ideal for infrastructure projects. However, the pension funds require investment in projects with a minimum of AA, and infrastructure projects are rated BBB or less," he said.
IIFCL was piloting a scheme, where the company would give a non-fund based guarantee, raising the rating of the infrastructure project to AA, he said.
Some projects under this scheme have been successful, he informed.
"InvITs, in which assets are housed in the mutual fund and the investors can buy those units, are also happening," he said, and added that a developed corporate bond market was also essential for the development of infrastructure in the country, which was "not happening at the moment".
Private sector lending to infrastructure projects have also ceased as the government has moved away from BOT(Build, Operate, Transfer) model, he said. "The government has very timely realised that the BOT model is stalled for some time, and brought in the Hybrid Annuity Model(HAM)," he remarked and added that the IIFCL was the front-running lender of the NHAI's project under this model.
UNI AND RN