Hindustan Times (Delhi)

World Bank, others to lend a hand to banks for infra funding

- Suchetana Ray and Mahua Venkatesh letters@hindustant­imes.com

NEW DELHI: Institutio­nal lenders, including World Bank, Asian Developmen­t Bank (ADB), and KfW, among others, are looking to team up with public sector banks (PSBs) to fund India’s cashstarve­d infrastruc­ture and renewable energy sectors. They currently fund government­backed projects individual­ly.

The agencies will give cheap loans to government banks, who in turn will lend to the two sectors. The World Bank has already sought the government’s approval for joint funding, while the others are looking to apply soon.

“We are keen to fund projects in partnershi­p with the other banks... There are large chunks of infrastruc­ture projects that can be funded jointly… We have sent a proposal to the finance ministry,” said Onno Ruhl, country director, World Bank India.

The World Bank wants to disburse loans worth $3 billion (around ₹20,100 crore) to the infrastruc­ture sector this year.

The Asian Developmen­t Bank has also decided to expedite its loan approval process for the projects in India.

The World Bank, Asian Developmen­t Bank, Brics Bank and others have lined up close to $2 billion to be pumped into the renewable sector alone. Banks will not be able to use these funds for any other purpose.

“There are concession­al loans from institutio­nal banks for public sector banks. PSBs can lend this money at the marginal costbased lending rate (MCLR),” said Upendra Tripathy, secretary, ministry of new and renewable energy. MCLR is the benchmark lending rate. Banks add their margins to the MCLR to arrive at loan rates for different sectors. Loans to sectors that are perceived “risky” attract higher interest rates. Both power and infrastruc­ture are deemed risky by domestic banks, given the high value of stressed assets. In fact, state-run banks have stayed away from lending to these two sectors in the past two years.

 ??  ?? Onno Ruhl, director, India, World Bank
Onno Ruhl, director, India, World Bank

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