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New refinance window soon

business Updated: Nov 20, 2008 22:51 IST
HT Correspondent

The government and monetary authorities are planning to allow a special refinance window for banks and financial institutions to lend to credit-starved infrastructure companies, small and medium enterprises and housing projects. The measure is expected to kickstart critical infrastructure projects worth over Rs 50,000 crore.

This would enable banks to borrow funds from India Infrastructure Finance Company Ltd (IIFCL), Small and Industries Development Bank of India (SIDBI) and the National Housing Bank (NHB), which would then be lent to the corporations.

Government sources said IIFCL, the apex financial intermediary for financing infrastructure projects and facilities in the country, would be able to provide additional refinance of about Rs 30,000 crore to banks and financing institutions.

An official familiar with the developments said the government is set to announce a fresh set of measures to boost investment of infrastructure sector to provide fiscal stimulus to the broader economy.

The Planning Commission had prepared a note on channelling more funds to infrastructure through IIFCL and the imperatives have been examined across sectors and across implementing agencies.

The note was submitted at a meeting called by the prime minister on Monday to review the macroeconomic environment in the background of the global financial crisis.

Similarly, NHB and SIDBI will provide additional refinance of more than Rs 10,000 crore each to housing projects and small and medium enterprises.