New league of infrastructure funding, older ones brushed aside floor
The process of new ideas entering in the league and replacing the previous ones is very common. Same goes with infrastructure funding plans. The fresh addition to such funding schemes is via real estate investment trusts(REIts). However, the most significant advancement here is amendment in the plans for the banks to offer loan for infrastructure.
After advancements, banks will now be permitted to lend funds to project developers (comprising affordable housing projects) for the period of 25 years with choice of rearranging the cost of funds after the time period of 5 years.
Along with this, banks are allowed to increase long term bonds to offer such types of financing to be exempted from cash reserve ratio (CRR), statutory liquidity ratio (SLR) requirements and priority loan norms. On one hand, improved emphasis upon banks for financing infrastructure can be considered as an implicit admission of other plans failed. On the other hand, a risk of bad loan stress increasing on the bank bodies becomes relatively higher.
Source: Mint
Cash Reserve Ratio, infrastructure funding, Real Estate Investment Trusts, Statutory liquidity ratio
