Mumbai: Reserve Bank of India (RBI) deputy governor Subir Gokarn on Thursday said the central bank is focusing on developing a strong corporate bond market to fund infrastructure financing, which is projected to touch $1 trillion during the 12th plan period.
“We are focusing on developing long-term corporate bond market to support banks in financing infrastructure projects,” Gokarn said while delivering his keynote address at the ASEM Conference in Mumbai, organized by the RBI and the European Commission.
“We need a strong corporate bond market as we have to take away the burden on banks from financing long-term funding needs of the infrastructure sector which is targeted at $1 trillion over the five year period beginning 2012,” he said.
The government has set an ambitious target of spending a hefty $1 trillion to build key infrastructure like roads, ports, airports and power plants over the next plan period as the country embarks on an ambitious double digit growth trajectory.
Towards this, the government has already decided to launch a Rs50,000 crore corpus to begin with.
Recently, the PM’s economic council chairman C Rangaragan had warned banks against their increasing exposure to the infrastructure sector coupled with realty, saying it will lengthen the maturity of bank assets and lead to liquidity risk, as returns from infrastructure projects have long gestation period.