Infrastructure Debt Fund will be based on a tripartite deal

The recently approved Infrastructure Debt Fund (IDF) will be based on a tripartite agreement b/w developer, lender (bank) and the IDF. The decision has been taken to infusing greater funds into infrastructure development in the country. Loans by the banks would be refinanced by IDF so that the lenders have free funds for more lending. The fund would try to gather resources from domestic and off-shore institutional investors, especially insurance and pension funds.

What will IDF do here?

Initially, infrastructure projects are financed by banks or a consortium of banks. Such projects need long-term funding of 20-25 years, while banks cannot fund beyond 5-7 years. IDF s will provide the long-term funds for the remainder of the life of the project.

Who will regulate IDF?
An IDF may be established either as a trust or company. A trust based IDF (Mutual Fund) would be regulated by SEBI, while an IDF created as a company (NBFC) would be regulated by the RBI.
The 12th Plan (2012-17) has pegged the requirement of infrastructure fund at $1 trillion.