Eligibility
- The infrastructure project must be from the infrastructure sectors as defined under SIFTI.
- The sum raised by the way of credit enhanced bonds shall be used only to reimburse the prevailing debt partially or fully.
- The infrastructure project must have achieved COD (Commercial Operational Date)/ provisional COD as on the date of extension of guarantee/ credit enhancement by IIFL.
- The promoters of the project must not be on the nonpayers list of Reserve Bank of India (RBI) or Credit Information Bureau (India) Limited (CIBIL) and no criminal proceeding has been pending against the promoters.
Requirement of Proposal
- India wants around $1 trillion investment in the next ten years for infrastructure, to have a maintainable development & growth.
Importance of Proposal
- It will help to improve the credit rating of bonds issued by infrastructure firms.
- Helps to attract long-term investments particularly from global insurance, pension & sovereign wealth funds.
- It will also help to develop the bond market in India.
- Credit enhancement measures can help to reduce interest rate costs by almost two percent.
Difficulties Involved
- It is a long tenure initiative as bulky infrastructure projects have long development projects & give returns slowly.
Conclusion
India being the fastest rising economy in the world, it would need such backing initiatives to withstand this growth. Credit guarantee fund is a welcome step. It would also depend on the political efforts of India to attract sovereign wealth & pension funds of various countries.
