The Union cabinet on Thursday approved a tripartite agreement for the mega Infrastructure Debt Fund (IDF), allowing the government to dig into the pockets of households and institutional funds to raise resources for building highways, and test investors’ confidence in an economy that has been the target of unsparing criticism from global credit rating firms.
The IDF would be based on a tripartite agreement between the developer, lender (bank) and the IDF. The bank loans would be refinanced by IDF, so the financial institutions have free funds for more lending. An IDF may be set up either as a trust or company. A trust-based IDF like mutual funds would be regulated by SEBI, while an IDF set up as a company (NBFC) would be regulated by the RBI.