The government and financial sector regulators such as RBI, Sebi and Irda will draw up the outline of the proposed infrastructure debt funds on Monday as the country prepares for raising $1 trillion for building ports, highways, power utilities and telecom infrastructure in the next five years.
The finance ministry, which will co-ordinate the meeting, will also seek views from foreign pension funds on how to make the proposed infrastructure debt fund an attractive investment option for them, a senior ministry official told FE. By June, the government hopes to give final shape to the fund announced in budget 2011-12.
Finance minister Pranab Mukherjee announced setting up debt funds through special purpose vehicles for attracting foreign investment in the infrastructure sector. ?To attract foreign funds for financing of infrastructure, I propose to create special vehicles in the form of notified infrastructure debt funds,? he had stated.
Last June, an expert panel headed by HDFC chief Deepak Parekh had recommended setting up such a fund with an initial corpus of R50,000 crore to meet the financial needs of the sector. According to sources, the proposed infra debt fund would have relaxed capital adequacy norms. In the budget for this fiscal, finance ministry had lowered the withholding tax rate from 20% to 5% and exempted the income of the fund from payment of income tax.