FinMin meets to discuss infra debt fund structure

The finance ministry today held a meeting to discuss the structure of the proposed Infrastructure Debt Fund. It deliberated upon issues such as jurisdiction of the fund, credit rating and the option of raising funds from abroad.

It was discussed whether the funds should be allowed to raise funds from abroad and whether credit rating should be given to such funds. The issue of funds’ jurisdiction was also discussed, officials present in the meeting said.

The government and financial sector regulators, such as the Reserve Bank of India, Securities and Exchange Board of India and Insurance Regulatory and Development Authority, have been discussing creation of an Infrastructure Debt Fund to boost infrastructure funding and increase spending.

It was discussed whether the fund should take the form of a company or a trust because the latter would not be able to raise bonds. The finance ministry may prepare a structure for both and leave it to the promoters to decide.

In the Budget for 2011-12, Finance Minister Pranab Mukherjee had announced setting up the funds through special purpose vehicles for attracting foreign investment in the infrastructure sector. “To attract foreign funds for financing of infrastructure, I propose to create special vehicles in the form of notified infrastructure debt funds,” he had said in his Budget speech in February.

The government is expected to come out with guidelines on infrastructure debt funds by June-end. India plans to invest $1 trillion in ports, highways, power utilities and telecom infrastructure in the next five years.

Though the government will put in its funds for infrastructure, a major chunk is expected to come from the private sector.