India's newly-launched infrastructure debt funds should
facilitate investment in national infrastructure. But the
Reserve Bank of India's approach to debt must change before the
product can succeed.
Infrastructure debt funds (IDFs) were established to create
a dedicated vehicle for low-cost, long-term financing for
infrastructure projects so that banks do not take on long-term
Although the Interim Report of High-Level Committee for
Financing of Infrastructure projected INR 515 crores ($1
trillion) of investment in the next five years, counsel have
questioned the practical use of IDFs because of investment
restrictions and regulatory confusion.
Trilegals Saurabh Bhasin predicted that parallel
regimes would develop, as the Securities and Exchange Board of
India (Sebi) regulates IDFs as mutual funds and the Reserve
Bank of India (RBI) regulates them as non-banking financial
Counsel called for RBI and Sebi to collaborate closely to
ensure that their respective rules do not...