Guidelines on infra debt fund being worked out

The government today said the capital market route is one of the options for allowing foreign investors in the proposed infra debt fund.

The fund is aimed at meeting financing needs of the core sector, pegged at $1 trillion during 12th Plan (2012-17).

The guidelines on infra debt fund is expected in the coming months.

"A lot of preparatory work has gone into this. There are two kinds of routes we are looking into. One is bond route to the infra debt funds and other one is unit route through the capital markets," Department of Economic Affairs Secretary R Gopalan said at a Assocham meet here.

In the Budget for FY12, Finance Minister Pranab Mukherjee had announced the government will facilitate the establishment of dedicated infra debt funds through special purpose vehicles for attracting foreign investment in the infrastructure sector.

"The regulators are working very hard and trying to see how we do not upset the existing regulations and still try to come out with the fund and perhaps in the next few months we will be in a position to achieve what we intend to achieve this year," Gopalan added.

Sources said the government is aiming at creation of more than one such debt fund, which will provide low-cost funds from abroad for financing the growth of the infrastructure sector.

The country's poor infrastructure, which is seen as a major bottleneck for economic growth, requires an estimated investment of a whopping $1 trillion in the 12th Plan, beginning 2012 and ending 2017. Of this, it expects 50% to come from the private sector.

On the new Takeover Code for mergers and acquisition, Gopalan said consultations were underway and the government, as a stakeholder, was engaged in discussions on it.

"My understanding is that the Securities and Exchange Board of India [Sebi] is very keen to take this forward very quickly. Soon enough Sebi will tackle this," he said.

Beside other suggestions, a Sebi panel on new Takeover Code headed by C Achuthan had suggested that buyers should make 100% open offer, giving exit option to all the shareholders of the target company.

Talking about multiple Know Your Customer (KYC) norms for the capital markets, Gopalan said there should be a common KYC code.

"We are working on it," he said adding the common norms will be consistent with the Prevention of Money Laundering Act (PMLA) and Financial Action Task Force (FATF).

FATF is an inter-governmental body aimed at development and promotion of national and international policies to combat money laundering and terrorist financing.