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State-run LIC will “shortly” announce setting up of a credit enhancement fund to provide guarantees for infrastructure sector companies to help them access funds from domestic and overseas markets at a lower cost.
“We expect LIC to announce it shortly,” Secretary in the Department of Economic Affairs Shaktikanta Das told PTI in an interview.
Asked about the impact of this move, he said if infrastructure sector companies “get a credit enhancement, they will be able to access funds from the market both domestic and overseas at lower cost because of the credit enhancement which they get“.
The infrastructure companies, Das said, will be able to leverage on this and get credit enhancement.
Citing an example, the secretary said that if “somebody, say, is ‘AAA—’, he/she can become a ‘AAA’ by utilising this facility“.
In his budget speech, Finance Minister Arun Jaitley had proposed that LIC of India will set up a dedicated fund to provide credit enhancement to infrastructure projects.
The fund would help in raising the credit rating of bonds floated by infrastructure companies and facilitate investment from long term investors.
The move assumes significance as infra firms are finding it difficult to raise adequate funds at competitive which are needed for projects with long gestation period.
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