The finance ministry’s decision to monitor progress of large projects, which may include Dedicated Freight Corridor, was taken ahead of a meeting of secretaries of 11 important ministries like civil aviation, coal and mines, commerce and industry, communication and IT, agriculture and, environment and forest
New Delhi: Responding to India Inc’s concerns about the impact of poor infrastructure on growth, the finance ministry on Tuesday decided to monitor progress of 10-15 large projects in the public sector, reports PTI.
“The projects are yet to be identified, but it is important that infrastructure develops at a faster pace and we will be closely monitoring 10-15 large projects,” a senior official in the ministry said.
The finance ministry’s decision to monitor progress of large projects, which may include Dedicated Freight Corridor, was taken ahead of a meeting of secretaries of 11 important ministries like civil aviation, coal and mines, commerce and industry, communication and IT, agriculture and, environment and forest.
Captains of industry, in their interaction with finance minister Pranab Mukherjee on 1st August had demanded close monitoring of large infrastructure sector projects being undertaken by the public sector.
Yesterday’s meeting, which was chaired by economic affairs secretary R Gopalan, also decided to hold road shows abroad to portray India as an attractive investment destination.
“When interest rates are near zero in (developed) countries, we should try our best to attract funds,” the official added.
Ministry officials also deliberated on the steps required to make the corporate bond market more vibrant.
As various steps taken by the government failed to increase liquidity in the sector, strengthening of the corporate bond market could go a long way in financing infrastructure development in the country, the official said.
Wednesday’s inter-ministerial meeting would review the progress of different ministries on the suggestions made by corporate India.
“It is a pre-cursor to the meeting which would be taken by the finance minister in the second week of October where he would take stock of the progress,” the official said.
Besides other things, Indian industry had given suggestions to Mr Mukherjee on the steps needed to improve infrastructure and corporate bond market. Poor infrastructure is seen as a major bottleneck to sustain high level of economic growth.
The RBI last month had issued the draft guidelines on new bank licences, pegging the minimum required capital for the holding company at Rs500 crore, and limits the foreign shareholding at 49%. It also said new banks should open at least 25% of its branches in unbanked rural centres
Mumbai: The Larsen & Toubro (L&T) group, a serious contender for a new banking licence, on Tuesday expressed doubts over the viability of new banks having 25% of their branches in rural areas as prescribed in the Reserve Bank of India (RBI) draft guidelines, reports PTI.
L&T Finance Holdings also asserted that the company will consider definitely the prospect of entering the banking space.
“It is not easy to say that rural branches are viable or not. Is there any other mode of servicing the rural clients without the normal brick and mortar banks? These are areas that we really need to work on,” L&T Finance Holdings president and whole-time director N Sivaraman told reporters here.
He was replying to a question whether the 25% stipulation for rural branches would deter the aspiring entrants.
“All those evaluations will have to be completed. We definitely need to do a thorough evaluation on whether it will be worthwhile at this point of time,” he added.
Mr Sivaraman, however, quickly added, “I will not say that we are not interested. Definitely, as a financial services player, that is of great interest to us, and we will actively consider the prospect.
“I think, it is an opportunity that is important for a financial services player. So we can not ignore it. We will have to wait for the final guidelines to come out. Once RBI announces its final guidelines we will definitely work on it,” he said replying to a query on whether the group will pursue entering the banking space given the strict entry norms.
The RBI last month had issued the draft guidelines on new bank licences, pegging the minimum required capital for the holding company at Rs500 crore, and limits the foreign shareholding at 49%.
The draft guidelines also said new banks should open at least 25% of its branches in unbanked rural centres.
“There are players like IDBI, IIFCL, and IDFC among others, who have already evinced interest for such a fund. We will try to collaborate with one of our peers for setting up such a fund,” RN Pradeep, CMD of Corporation Bank said
New Delhi: State-owned Corporation Bank today said it is drawing up plans to float an Infrastructure Debt Fund (IDF) and will soon approach its board for approval, reports PTI.
“We had always asked for approval to set up such a fund. Now the final guidelines have come and we are definitely interested to float one. The matter will be placed before our board in the near future,” RN Pradeep, CMD of Corporation Bank, told PTI.
He also said that the bank would like to partner with other interested players for floating such an infra fund.
“There are players like IDBI, IIFCL, and IDFC among others, who have already evinced interest for such a fund. We will try to collaborate with one of our peers for setting up such a fund,” he added.
On 24th September, the Reserve Bank of India (RBI) allowed banks and non-banking financial companies (NBFC) to sponsor IDF, which can be set up as mutual funds and NBFCs.
This announcement came after finance minister Pranab Mukherjee’s speech in the 2011-12 Budget for setting up IDFs in order to accelerate and enhance the flow of long-term debt in infrastructure projects.
As per the central bank guidelines, IDFs that can be set up as NBFCs should have a minimum net-owned fund of Rs300 crore and a capital adequacy ratio of 15%.
Similarly, in case of mutual fund route, it has to follow the limit on investments in financial services companies and on capital market exposure.
On the possible corpus and time line for floating such fund, Mr Pradeep said that these things would be decided after the board approval.
The Mangalore-headquartered public sector lender has lent around 10% of its total advances of Rs79,000 crore by June 2011 to infra sector and has less leverage to increase it due to sectoral cap imposed by the central bank.
“A debt fund will allow us to lend more to infra sector,” Mr Pradeep said, adding that the bank’s total exposure to infra sector is spread across road, power and port sectors.
Corporation Bank reported a 5.29% increase in its net profit to Rs351.45 crore for the first quarter ended 30 June 2011, against Rs333.78 crore registered in the same period previous year.
Total income of the bank rose by 42.5% to Rs3,266 crore during this period from Rs2,293 crore in the corresponding period last fiscal.