Banks may be allowed to issue bonds for infrastructure projects

ET reported that government may allow banks to raise long term resources for infrastructure financing through issue of development bonds.

It is envisaged that banks may be permitted to raise long term resources through issuance of development bonds, for the purpose of long term project finance,' the Department of Industrial Policy and Promotion (DIPP) said in a discussion paper on ways to fund infrastructure projects.

It said that the banks may be encouraged to extend high risk project finance 'with suitable Central Government support' with a view to distributing risk and funding sources.

The infrastructure sector requires a huge funding of one trillion dollar in the 12th Plan (2012-17).