The Union Finance Minister Shri Pranab Mukherjee today said that setting up of Infrastructure Debt Fund (IDF) through public private partnership would meet the long term need of infrastructure sector funding. Mr. Mukherjee said this after presiding over the signing of a Memorandum of Understanding in New Delhi this evening between the ICICI Bank, Bank of Baroda, CITI Bank and Life Insurance Corporation of India to Set-Up India’s First Infrastructure Debt Fund. He expressed confidence that the establishment of IDF through Public Private Partnership model would be a guiding principle for future activities.

The Finance Minister said funds to the tune of 1 Trillion US Dollars would be required for Infrastructure Sector funding in next five years and fifty percent of which would come from private sector through PPP model. Our correspondent reports that, India’s First Infrastructure Debt Fund is structured as a Non-Banking Finance Company (IDF-NBFC).

Speaking to All India Radio, Ms. Chanda Kochar, Managing Director, of ICICI Bank said the IDF size will total about 2 billion dollars, and equity is to be contributed by the ICICI Group 31 %, Bank of Baroda 30 %, Citi Bank 29 % and LIC 10 %. She said the total equities would amount to 300 crores, and the rest will be geared through capital and borrowed funds.

Union Finance Minister Pranab Mukherjee in his Budget Speech for 2011-12 had announced setting-up of Infrastructure Debt Funds to accelerate and enhance the flow of long term debt in infrastructure projects for funding the government’s ambitious programme of infrastructure development.