News Column

India : CENTRAL BANK bans banks from buying new issues of infrastructure bonds

September 4, 2014

A central bank ban on Indian banks buying new issues of infrastructure bonds has handicapped Prime Minister Narendra Modi's chances of gathering billion for the mega-projects through the bond market.

Modi made heavy infrastructure investment and construction of affordable housing for all by 2022 key elements of a reform agenda aimed at getting India's lumbering economy to grow a lot faster.

By meeting the housing goal, an investment of US $2 trillion is needed.

Faced with those funding needs, the government in encouraged banks to issue bonds to fund infrastructure by exempting these bonds from reserve requirements, to enable them to extend cheaper loans to the cash-starved sector.

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Source: TendersInfo (India)

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