India Launches $2 Billion Infrastructure Debt Fund

New Delhi: The government, in partnership with private lenders ICICI Bank and the Citigroup, launched a $2 billion infrastructure debt fund to meet long-term financing needs of the sector. This is the first of its kind debt fund in India which will invest in Public Private Partnership (PPP) projects, roads, railways, ports, airports and other infrastructure. The country's largest private sector lender, ICICI Bank, will hold 31 percent stake, while Citi Financial, an arm of the U.S.-based Citigroup, will control 29 percent stake in the fund structured as a non-banking financial company (NBFC). Government-run Bank of Baroda will hold 30 percent and the Life Insurance Corporation of India 10 percent stake in the fund. "This fund to my knowledge is definitely the first fund of this kind in India, and probably one of the first of its kind in the world as well," ICICI Bank Managing Director, Chanda Kochar, said after signing of the Memorandum of Understanding (MoU) here at the finance ministry at North Block. The size of the fund will be $2 billion. The Chief Executive Officer of Citi Bank, Pramit Jhaveri, Chairman and Managing Director of Bank of Baroda, M.D. Mallaya, and Managing Director of LIC, Sushobhan Sarkar, signed the agreement in the presence of Finance Minister, Pranab Mukherjee. Mukherjee said setting up of the fund through PPP would help meet the long-term need of infrastructure sector funding. The Infrastructure Debt Fund (IDF) would seek to raise debt capital from domestic as well as foreign resources and would invest in infrastructure projects under the PPP model that have completed an year of operations, said a finance ministry statement. "The IDF will expand and diversify the domestic and international sources of debt funding to meet the large financing needs of the infrastructure sector, thereby giving an impetus to the creation of the infrastructure necessary to drive India's growth," it said.