NEW DELHI: The government may be repeatedly asking banks to increase loan flow to the infrastructure sector but the Reserve Bank of India has a different take on the issue. During finance minister Pranab Mukherjee's meeting with bank chiefs on Friday, RBI Deputy Governor K.C.Chakrabarty flagged the issue of lenders nearing capacity as far as loans for road, port, airport and power sector projects were concerned . Besides, he is learnt to have pointed to asset-liability mismatch issues – 80% of the bank deposits mature in less than five years, while infrastructure loans are typically provided for over 10 years. Instead, Chakrabarty, himself a former bank chairman, suggested that the government clears policy impediments to enable life insurance companies and pension funds, which have funds for 20-30 years at their disposal, to invest in the infrastructure sector. Though it is not known what the reaction of the finance ministry was, a bank chief told TOI after the meeting that bankers came up with the same set of solutions to deal with the issue of mismatch and reaching the exposure limit. One of the suggestions was to seek permission to issue tax-free infrastructure bonds, something that the government is unwilling to do. At the meeting, the government once again made a pitch for the Takeout Finance Scheme, which is aimed at providing further lending space to banks. Under the scheme, relaunched by India Infrastructure Finance Company last year, banks financing infrastructure projects can enter into arrangements with another entity to transfer the outstanding loans. But till May this year, only nine infrastructure projects, involving a takeout amount of Rs 1,600 crore, have been cleared.
TOI
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