Infrastructure Sector Current Affairs - 2020
Union Government is going to launch Rs.500 crore Credit Enhancement Fund (CEF) in July 2018 to facilitate infrastructure investments by insurance and pension funds.
The CEF provides additional source of assaurance or gaurantee that borrower will service their loan. It also helps borrower to raise loans at lower interest rates. The fund was first announced in Union Budget for fiscal year 2016-17.
Credit Enhancement Fund (CEF)
CEF will provide credit enhancement for infrastructure projects which will help in upgrading credit ratings of bonds issued by infrastructure companies and facilitate investment from investors like pension and insurance funds.
The initial corpus of the fund will be Rs 500 crore and will be sponsored by IIFCL (India Infrastructure Finance Company). It will operate as a non-banking finance company (NBFC). IIFCL will hold 22.5% stake in the NBFC, while Asian Infrastructure Investment Bank (AIIB) has been offered by the Government to pick up 10% stake.
At present, only $110 billion is being invested in infrastructure in India, against requirement of $200 billion, leading many analysts to classify India as infrastructure deficit country. Most of the present infrastructure project financing is done by banking system. But all these lenders are saddled with problem of non-performing assets (NPAs). So there is need for the private sector to be more active on the infrastructure investment front. CEF will serve as alternative for rising of money for infrastructure projects through corporate bonds.
Tags: Business • Credit Enhancement Fund • Economy • IIFCL • Infrastructure Sector
The National Investment and Infrastructure Fund (NIIF) has signed a MoU with Qatar Investment Authority (QIA) for facilitating investment in India’s infrastructure.
Objective of MoU: Facilitate QIA to study investment opportunities in India’s infrastructure sector in order to enable both sides to decide on joint investments.
The MoU has been signed for a period of one year during which both signatory parties will discuss and agree on the terms, criteri, principles for investments.
Under it, the NIIF with share a pipeline of investment opportunities available in the infrastructure sector in India with QIA.
It should be noted that NIIF has signed similar agreement with the United Arab Emirates (UAE) in February 2016 to mobilize investments into the Indian infrastructure sector.
Qatar Investment Authority: It is the sovereign wealth fund of Qatar which deploys a wide range of investment strategies and invests through a carefully selected network of top-tier fund managers.
National Investment and Infrastructure Fund: It is India’s first 40,000-crore rupees sovereign wealth fund, aimed to attract investment in infrastructure sector development in commercially viable projects, both brownfield and greenfield including stalled projects.