New banks to fund $1.5-tr infra projects

In a bid to build huge infrastructure deficit, the Central government is considering turning to the private sector to help finance major infrastructure projects across the country. In this connection, RBI is currently contemplating offering licenses to private players to set up infra financing banks in order to finance a staggering sum of $1.5 trillion in roads, ports, power, and allied projects over the next 10 years and bridge a gap that ratings agency Standard & Poor’s says, is siphoning off almost 5 percent of the country‘s gross domestic product. As a matter of fact, specialized banks could cater to the wholesale and long-term financing needs of the growing economy and possibly fill the gap in long-term financing, the RBI said in a statement recently. With commercial banks saddled with huge non-performing loans and credit growth languishing at decade low, lenders have been reticent to invest in projects that involve a long waiting and gestation period before returns starts.