Infra Debt Fund likely to be operational from next fiscal

Planning Commission has set up panel to look into changes

 An indication to this effect was given by the Planning Commission Deputy Chairman Montek Singh Ahluwalia here on Wednesday. “We hope to get the necessary inputs soon for putting in place the regulatory framework for setting up of the IDF. Hopefully, it will be operational from the next fiscal,” he told newspersons here.

The Planning Commission has set up a panel headed by the SBI Chairman, O P Bhatt to look into the changes required in the regulatory framework for facilitating the setting up of the IDF.

Few months back, an expert panel headed by HDFC chief Deepak Parekh had recommended setting up of the IDF with a corpus fund of  Rs 50,000 crore for financing infrastructure projects.

In its recommendations submitted to the Plan panel, the Parekh committee had suggested to the government to change existing rules to allow funding by pension and insurance companies.

The committee has also recommended that regulatory bodies like the Reserve Bank, market regulator Securities Exchange Board of India (Sebi), insurance regulator the Insurance Regulatory Board of India (Irda) and pension fund regulator Pension Fund Regulatory Development Authority (PFRDA) be allowed to make necessary changes in their  existing laws to allow use of massive insurance and pension funds for financing infrastructure projects. The Parekh committee has also recommended that the proposed IDF   be set up as venture capital fund (VCFs) to be managed and regulated by Sebi.

It has suggested that the Irda and the PFRDA be allowed to modify the rules to enable these funds to invest in the infra fund. The Parekh Committee has also recommended that foreign insurance, pension and sovereign funds be invested in the proposed IDF.

For this, it has suggested that the RBI should be allowed to create a special window for these kinds of foreign debt with a tenure of 10 years or more. It has also recommended that the multilateral agencies such as the World Bank and the Asian Development Bank should be approached to invest in the infra fund.