Fitch's Indian arm to start rating IDFs

Govt says it will help instill confidence among global investors, provide thrust to infra sector

The Indian arm of global agency Fitch will assign credit ratings to IDF so as to help instill confidence among global investors and provide thrust to the infrastructure sector, the government said today.

"India Ratings has come out with a new product for rating of IDFs (Infrastructure Debt Fund). This is very important because this will give confidence to investors especially from overseas Sovereign Wealth Fund and pension funds and others," Department of Economic Affairs Arvind Mayaram said here.

The rating is going to be extremely helpful, he said "for them to be able to assess whether their investments in a particular IDF or another IDF would be able to give the kind of return they expect."

Also a joint MoU was today signed between eight public sector banks -- Allahabad Bank, Bank of India, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce, UCO Bank and IL&FS Infrastructure Debt Fund for takeout finance.

This IDF is sponsored by Infrastructure Leasing and Finance Services Ltd, Life Insurance Corporation (LIC) and Hamon Group of Industries.

Mayaram said, "We are also now looking at some movement on the takeout finance side. Several IDFs have been set up."

This is extremely useful because it is going to help banks clean up their balance sheets, he said, adding that they would be ready to on-lend further to new projects.

During the 12th Five Year Plan, India requires $1 trillion for development of infrastructure in the country.

Mayaram said the banks would continue to play critical role in providing debt finance for the new infrastructure projects.

"And from that point of view, this particular agreement is of great value," he said.