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FI, bank funding of projects worth Rs 50,000 cr -- Special purpose vehicles for infrastructure likely

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NEW DELHI, June 13

FINANCIAL institutions and banks are considering the setting up of special purpose vehicles (SPVs) to fund infrastructure projects worth close to Rs 50,000 crore over the next four to five years.

All financial institutions barring the troubled IFCI besides major commercial banks are expected to participate in the setting up of the SPVs.

This was announced by the Union Finance Minister, Mr Yashwant Sinha, today after a meeting with the chiefs of the FIs and major commercial banks here. The meeting was attended by the chiefs of IDBI, LIC and SBI.

Mr Sinha told prespersons that the FIs, State Bank of India and the Life Insurance Corporation of India had agreed to fund infrastructure projects spread over four to five years.

"We are broadly looking at Rs 40,000 to Rs 50,000 crore of financing'', he said after the meeting.

The meeting is a follow-up of this year's Budget announcement of the Finance Minister. In the Budget, Mr Sinha had announced that an infrastructure equity fund of Rs 1,000 crore would be set up for providing equity investment for infrastructure projects.

Contributions to the fund would come initially from public sector banks, insurance companies and financial institutions. The fund would be managed by Infrastructure Development Finance Company (IDFC).

Mr Sinha had also said that the Government would encourage public-private partnerships for the provision of infrastructure facilities.

The Minister said a consortium of FIs would take up funding of some of the Railway projects which were not included in the Railway Budget due to shortage of funds. This was discussed earlier as funding for last mile projects.

The FIs would also take up the financing of the National Highway Authority of India's (NHAI) National Golden Quadrilateral project along the East-West and North-South corridors and other rural roads on a commercial basis.

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