Maharashtra To Float Fin Arm To Source Funds
The Maharashtra government is planning to set up a financial intermediary to access World Bank funds for urban infrastructure projects.
The financial intermediary will either be a trust fund managed by an asset management company or a non-banking financial company.
The corpus for the intermediary will be contributed by the government of Maharashtra, Mumbai Metropolitan Region Development Authority (MMRDA) and financial institutions like HDFC, ICICI and IL&FS.
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The intermediary will provide financial assistance to credit- worthy municipalities for investment in urban infrastructure projects, and also raise funds from the capital market.
The governments decision follows World Banks indication that they prefer to support a financial intermediary at a state or national level for financing urban infrastructure instead of directly financing such projects.
The plan is on the basis of suggestions made by the World Bank which was approached by the government for assistance in 1994 for a Rs 2,600 crore urban infrastructure project. MMRDA had prepared a project called Mumbai Urban Infrastructure Project for financial assistance from World Bank.
The project included schemes such as water supply, storm water drainage, sewerage and also included the concept of setting up a Municipal Urban Development Fund to meet the local infrastructure funds. As of now, the World Bank has been funding the major infrastructure projects directly. In the first project, Bombay Urban Transport Project-I for the period 1978-1984, the World Bank had directly funded $25 million.
The World Bank recently withdrew its offer to extend loan to the Mumbai Urban Transport Project II citing slow pace in the progress of the project as the main reason.
The financial intermediary will either be a trust fund managed by an AMC or a NBFC Urban housing and infrastructure projects in state