Local sources comment that India Infrastructure Finance Company Limited (IIFCL) has launched its first infrastructure debt fund (IDF) with $1 billion raising target. The IDF will complement commercial banks in providing the required long-term funding to infrastructure sector and help in addressing their asset liability mismatch.

The goal is that the fund mobilises resources from domestic and international insurance and pension sectors. Besides IIFCL, other investors in the debt fund include Canara Bank, Oriental Bank of Commerce, Corporation Bank and HUDCO.

The idea of the Indian government is that the introduction of the new scheme by the IIFCL would pave the way for more infra debt funds.

According to the sources, the new scheme will mainly undertake investment in debt securities or securitised debt instruments of infrastructure companies, infrastructure capital companies or infrastructure projects, special purpose vehicle (SPV) or bank loans.

The regulations for infrastructure debt funds was announced by the government in 2011-12.

India Infrastructure Finance Company Ltd (IIFCL) is providing long term financial assistance to various viable infrastructure projects in the country. Apart from equity, IIFCL raises long term debt from the domestic market, debt from bilateral and multilateral institutions and in foreign currency through external commercial borrowings. The borrowings of the company are backed by sovereign guarantee.