The Hindu Business Line : Banks can invest in unrated bonds of infrastructure cos

Mumbai, Dec. 7 In a bid to encourage investment in infrastructure, the Reserve Bank of India has permitted banks to invest in unrated bonds of companies engaged in infrastructure activities within the ceiling of 10 per cent for unlisted non-Statutory Liquidity Ratio securities.

In a notification issued today, the RBI said it wants to encourage banks to increase the flow of credit to the infrastructure sector.

Earlier, in another circular issued on November 30, the RBI had expanded the scope of infrastructure lending by banks and financial institutions to include projects involving laying down or maintenance of gas, crude oil or petroleum pipelines.

Mr Jitender Balakrishnan, Managing Director, IDBI Ltd, said that the move would definitely give a fillip to the infrastructure industry.

“In our case, about 20-25 per cent of our total credit is to the infrastructure sector. But in the case of commercial banks it could be much lower,” he said.

According to the RBI’s Report on Trend and Progress of Banking in India, 2006-07, infrastructure accounted for the largest share of incremental bank credit to the industry at 21.4 per cent.

The outstanding bank credit to the infrastructure sector as on March 30, 2007 was Rs 1,43,116 crore against Rs 1,12,830 crore as on March 31, 2006, as per RBI data.

More Stories on : Corporate Bonds | Infrastructure | RBI & Other Central Banks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Govt to nudge banks to lend more to organic farming

5 PSBs to have majority stake in Payments Corp

Managing external shocks

RBI cautions public against remittance frauds

Forex reserves rise $1.2 b

Copious forex inflows may impact growth, prices

Rupee trading volatile

Institutional finance for rental housing on cards

Promoters of Max New York Life to infuse Rs 2,600 cr

Bond rally limited

22 fertiliser cos to get bonds for Rs 3,890 cr

Banks can invest in unrated bonds of infrastructure cos

Credit guarantee trust for SMEs gets $5-m support

12 banks sign financing documents for Delhi airport

Call rates end lower

Sobti appointed IndusInd Bank chief