To meet the growing developmental needs of the country , particularly of the infrastructure sector, a step in the direction of using a small part of reserves for development has recently been taken after considerable deliberations, said YV Reddy, governor, Reserve Bank of India.
According to Reddy who was speaking at ?the?international?capital?markets?and?emerging markets?roundtable?in?Washington, .a scheme has been finalized which envisages RBI investing, in tranches, up to an aggregate amount of $ 5 billion in fully Government guaranteed foreign currency denominated bonds issued by an overseas SPV of the India Infrastructure Finance Corporation Ltd. (IIFCL), a wholly owned company of Government of India. The funds, thus raised, are to be utilized by the company for on-lending to the Indian companies implementing infrastructure projects in India and/or to co-finance the ECBs of such projects for capital expenditure outside India without creating any monetary impact. The lending by the SPV under the arrangement would be treated as external commercial borrowings (ECB) and would be subject to the prescribed reporting and disclosure requirements.
