India’s robust growth during the recent decades can be attributed to infrastructure finance. Leading the developing countries list, India is growing at a rate of over 8 percent GDP. Business finance institutions have been instrumental in providing the financial support in the infrastructure space. Infrastructure needs to be complemented with business finance resources. But India has been well supported with business finance for infrastructure development activities.
Approving the inclusion of business finance in the infrastructure space, the government is laying a lot of impetus on the importance of the role of infrastructure finance companies. That’s specifically the reason why the eleventh five year plan of the Indian government foresees business finance investments in infrastructure to the tune of twenty crores plus. Directing the planning commission to encourage private business finance investment in infrastructure, the prime minister’s office has laid its objective clearly.
With the auguring of non-banking finance companies, the situation looks even better. Business finance in infrastructure will be given support by the Reserve Bank of India, which has developed specialized policy compartment for it. Infrastructure needs these special entities to fund exorbitant amounts that are difficult to raise in the market.
Infrastructure Financing Companies that have good credit ratings and over 300 crores in funds are given the go-ahead. Now that the Reserve Bank of India has made provisions to infrastructure finance companies, business finance in infrastructure will get more thrust.
Borrowers for business finance can expect to get more finance, since infrastructure companies can legally mobilize more than a quarter of its funds. This might not be over-leveraging, but does add more flexibility to the scheme of things in business finance. Single-group multiple borrowings can take more than forty percent over existing funds from infrastructure companies.
Infrastructure finance thrives on funds that have been invested for longer periods of time. Though individual investments are tough to come by, institutions like the World Bank and the Asian Development Bank are providing able assistance. Teaming up with these institutions, the government is ensuring long term investments in infrastructure.