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Interest subsidy for IDBI on the anvil
New Delhi, Aug 17: Centre is likely to provide interest subsidy, along with tax sops to Industrial Development Bank of India to enable it to retain development financing role even after its conversion into a bank.
New Delhi, Aug 17: Centre is likely to provide interest subsidy, along with tax sops to Industrial
Development Bank of India to enable it to retain development financing role even after its conversion into a bank.
"IDBI will continue with its development financing even
after its conversion (into bank) and for that tax concessions
and interest subsidy will be provided," official sources told
here.
Sources, however, did not give details of the proposed move and said the same were being worked out.
There were indications that the proposed subsidy was akin to "viability gap funding" for infrastructure projects, as proposed in the union budget.
Under viability gap funding, government bridges the gap between the rate of return the bank gets on its lending and the actual return the project yields.
Usually in infrastructure projects returns are lower than the cost of funds because of long gestation periods.
The move for interest subsidy comes in the backdrop of Janardhana Reddy-led parliamentary standing committee finding that granting of RBI's forbearance in the form of exemption from meeting SLR and CRR for five years would not be sufficient to ensure the survival of IDBI.
Recently, the Union Cabinet approved industrial bank (transfer of undertakings and repeal) bill to incorporate suggestions of the committee, which included retaining the status of DFI even after its conversion into a bank.
Bureau Report
Sources, however, did not give details of the proposed move and said the same were being worked out.
There were indications that the proposed subsidy was akin to "viability gap funding" for infrastructure projects, as proposed in the union budget.
Under viability gap funding, government bridges the gap between the rate of return the bank gets on its lending and the actual return the project yields.
Usually in infrastructure projects returns are lower than the cost of funds because of long gestation periods.
The move for interest subsidy comes in the backdrop of Janardhana Reddy-led parliamentary standing committee finding that granting of RBI's forbearance in the form of exemption from meeting SLR and CRR for five years would not be sufficient to ensure the survival of IDBI.
Recently, the Union Cabinet approved industrial bank (transfer of undertakings and repeal) bill to incorporate suggestions of the committee, which included retaining the status of DFI even after its conversion into a bank.
Bureau Report