“IIFCL and Asian Development Bank will work together to develop the Indian bond market. This association will pave way for investments by the insurance companies into the infrastructure sector,” according to Mr S. K. Goel, the Chairman and Managing Director of India Infrastructure Finance Company Ltd (IIFCL).
Speaking at the Suminfra meet hosted by the CII, Mr Goel said IIFCL and ADB are expected to formally sign an agreement next month and work together in developing the country's bond market.
IIFCL has chosen credit rating firm CRISIL to rate these bonds.
By doing so, this would facilitate investments by insurance companies into the infrastructure sector.
“Ratings can be made investment grade appropriate for the insurance sector.
By doing so, we will be able to attract about 15 per cent of surplus funds they have for the infrastructure.
Currently, investments by insurance companies into infrastructure are not allowed as the Reserve Bank of India classifies investments in infrastructure in a different category,” he said.
By November, IIFCL is expected to come out with a pilot initiative aimed at developing the bond market which is crucial for fund flow in to the infrastructure segment.
The company's overseas arm IIFCL UK, which has a corpus of over $500 million, is financing the purchase of equipment overseas.