The Credit Enhancement Fund (CEF) being launched by the government next month to boost bond market funding for infrastructure projects will need facilitations on three fronts if it has to fly.
CEF is of great significance because protracted asset quality nightmare and tightening regulations have eroded banks’ ability to fund infrastructure projects. In the past three years, outstanding bank credit to infrastructure has fallen 300 basis points to 12 per cent of the bank book.
Crisil’s analysis shows that in the next three years, India requires over Rs 30 trillion to build roads, railways, airports and meet growing electricity requirements.
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