New Delhi: The Secretary of the Department of Financial Services (DFS), Ajay Seth, has called for greater collaboration between banks and infrastructure finance companies to accelerate the execution of large-scale infrastructure projects. At a recent industry event, Seth emphasized the critical role of joint financing in bridging India’s infrastructure deficit and achieving the government’s ambitious growth targets.
Importance of Collaboration
Seth highlighted that large infrastructure projects often require substantial financial resources, long gestation periods, and specialized risk assessment capabilities. “Banks and infrastructure finance companies must work together to pool their resources, expertise, and networks to provide sustainable financing for high-value projects,” he said.
He noted that partnerships could help reduce the risk exposure of individual lenders and ensure a more diversified financing framework. This, in turn, would boost investor confidence and enable faster project execution. 
Current Landscape and Challenges
India focuses heavily on infrastructure development, as evidenced by initiatives like the National Infrastructure Pipeline (NIP) and the Gati Shakti Plan. These programs require trillions of rupees in funding across sectors such as highways, railways, airports, and renewable energy.
Despite this focus, infrastructure financing in India faces several challenges, including:
- Limited long-term funding sources.
- High leverage of financial institutions.
- Regulatory constraints.
- Asset-liability mismatches.
Seth urged stakeholders to overcome these hurdles by adopting innovative financing models such as take-out financing, credit enhancement mechanisms, and securitization of infrastructure assets.
Role of Infrastructure Finance Companies
Infrastructure finance companies (IFCs) possess niche expertise in appraising large projects and managing risks specific to infrastructure. Seth suggested that banks could benefit from IFCs’ domain knowledge while leveraging their liquidity to provide structured loans. “The synergy between banks and IFCs could lead to more efficient project funding and optimal utilization of financial resources,” he said.
Green and Sustainable Financing
Seth also underlined the importance of green financing in meeting environmental, social, and governance (ESG) goals. “Collaborations should align with India’s commitment to sustainable development and its transition to a low-carbon economy,” he added.
He suggested that banks and IFCs could play a pivotal role in financing renewable energy projects, green hydrogen initiatives, and energy-efficient transportation systems.
Way Forward
Seth proposed creating a framework for co-lending and joint appraisal mechanisms to foster collaboration. He also urged regulators to enable more flexible rules for consortium lending and credit enhancements.
He stressed the importance of timely decision-making and innovative approaches in achieving India’s infrastructure vision. He called the collaboration between banks and IFCs a “key enabler” for driving the country’s economic transformation.
Industry leaders and financial institutions have welcomed the address, with many agreeing that collaborative efforts could unlock new opportunities in India’s evolving infrastructure landscape.
