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The finance ministry has recommended that banks and non-banking financial companies (NBFCs) increase their participation in financing large-scale infrastructure projects, crucial to India's goal of achieving developed nation status by 2047. M Nagaraju, secretary of the Department of Financial Services, emphasised the need for innovative financing and pooling resources for large projects. He further stressed the importance of risk management and maintaining timelines for project viability. India Infrastructure Finance Company (IIFCL) has sanctioned significant loans and is expected to lend more in the coming years. IIFCL's CEO P R Jaishankar expressed optimism that the upcoming Budget will prioritise infrastructure investments and advocated for private sector involvement in sectors like Indian Railways.
The finance ministry has recommended that both banks and non-banking financial companies (NBFCs) enhance their involvement in financing large-scale infrastructure projects, which are vital for India's aspiration to attain developed nation status by 2047. Advertisement
At an event hosted by the India Infrastructure Finance Company (IIFCL), M Nagaraju, the secretary of the Department of Financial Services, mentioned that he had advised IIFCL, the National Bank for Financing Infrastructure and Development, and banks to shift their focus from secured assets to more expansive infrastructure projects. He also highlighted the necessity for banks and NBFCs to pool their resources to finance these large initiatives.
Nagaraju further stated that lenders should prioritise creating world-class infrastructure and consider exploring innovative financing products. He underscored the importance of risk management to safeguard against fraud. According to him, infrastructure projects are typically profitable if fraud is avoided, funds are utilised properly, and deadlines are met.
He lauded the progress made by India Infrastructure Finance Company Limited (IIFCL) in the past four years, citing significant recovery achievements.So far, IIFCL has approved loans worth INR 2.8 trillion, with INR 1.4 trillion disbursed, half of which occurred in the past four to five years. Nagaraju also expressed that IIFCL should aim to lend INR 1 trillion over the next three years to support the Viksit Bharat vision, noting that the institution has the capacity, experience, and resilience to manage complex projects and finance India's infrastructure.
Nagaraju outlined three key areas for IIFCL to concentrate on: Developing new financing instruments tailored to the evolving needs of infrastructure projects, identifying and adopting innovative funding strategies and strengthening governance for better efficiency and transparency.
In a separate conversation during the event, IIFCL's managing director and CEO, P R Jaishankar, expressed confidence that the forthcoming Budget would prioritise infrastructure investment. He stated that robust infrastructure is crucial for accelerating GDP growth, especially as India aims for a USD 5 trillion and eventually a USD 30 trillion economy.
IIFCL said that it will continue to focus on its core infrastructure business while exploring emerging sectors such as sustainable infrastructure, electric vehicle charging, and battery swapping. Jaishankar also confirmed that plans to list IIFCL on the stock exchanges remain under review, with a previous target set for an initial public offering by 2024-25.
Jaishankar also advocated for increased private sector participation in Indian Railways, which has largely remained state-owned unlike the aviation sector. He stated that it was "high time" for the privatisation of Indian Railways and that private sector investment is crucial for scaling up infrastructure in India. He added that the next phase of investment should come from the private sector, urging the private sector to meet expectations and rise to the challenge.
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