The Hindu Business Line : IDFC to handle Rs 50,000-crore infrastructure fund

THE Infrastructure Development Finance Company (IDFC) is not only safe but would soon be given a pivotal role in the country's infrastructure funding need.

While ruling out any plans for merger of the company with State Bank of India (SBI), the Government has now decided to reward IDFC's skills by making it the hub for operationalising the Rs 50,000-crore infrastructure fund announced by the Finance Minister, Mr Jaswant Singh, in this year's budget.

"It has been decided that the Rs 50,000-crore infrastructure fund would be made operational through IDFC. The company houses the secretariat for the fund. We feel that IDFC has the good human resources capital such as appraisals skills for the infrastructure sector," said Mr Vinod Rai, Additional Secretary, Ministry of Finance and also a Government director on the IDFC Board.

Mr Rai said that IDFC could assume the apex role in infrastructure funding on similar lines of the status enjoyed by Nabard for funding of rural infrastructure and SIDBI for financing of small industries.

IDFC's responsibilities on the infrastructure fund would be similar to the role performed by Industrial Development Bank of India (IDBI) on the Corporate Debt Restructuring (CDR) mechanism. The CDR mechanism is an arrangement between lenders to look into financial restructuring of weak but viable companies.

"IDFC would be required to do the paperwork needed for the assessment of proposals for funding of projects through the infrastructure fund. The duties would be similar to what IDBI does for the CDR mechanism," Mr Rai said.

He also categorically ruled out any proposal to merge IDFC with SBI as has been speculated recently. "There is no merger of IDFC with SBI on the cards," Mr Rai said.

Mr Rai said that it has been decided that RBI's 15 per cent stake in IDFC would be transferred to the Government since the regulator did not want to hold on to its stake in the private company. The Government would continue to hold RBI's transferred shares in the near future. "RBI's holding will be transferred to Government for which the modalities are being worked out. This share would not be transferred to anybody now, not even in the near future," he added.

There had been speculation that the share transfer was being done to hand the same over to SBI to later merge IDFC with the bank.

Mr Rai has ruled out any move to tamper with the private sector character of IDFC. "IDFC will remain a private company. There would be no change in character," he added.

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