Infrastructure sector and the Pension Fund industry can match each other’s needs and requirements, said Mr Hemant G Contractor, Chairman, Pension Fund Regulatory & Development Authority (PFRDA) at the CII Banking & Finance Summit on ‘Building India through a Stronger Financial Sector’ organised by Confederation of Indian Industry (CII) here today. The infrastructure sector requires large volume and long term funds and the Pension fund industry has the similar funds available for investment, hence there has been a strong growth of the pension fund’s portfolio in the infrastructure sector, he added.
Infact, the pension fund industry contribution has been round 17-19 per cent annually and he was hopeful that this would increase steadily. As a regulating authority, PFRDA has laid down the guidelines for Indian pension funds to invest in listed funds and also venture into new bond instruments which will further increase the exposure to the infrastructure sector, added Mr Contractor.
Pointing out the non-availability of enough money in the system, Mr S B Nayar, Chairman & Managing Director, India Infrastructure Finance Company Ltd (IIFCL) suggested that the infrastructure finance companies require capitalisation as well as funding from multilateral institutions. Sops like income tax benefit should be given to the investors. Overseas money will only flow once the construction of the projects starts, explained Mr Nayar.
Mr K Mukundan, CEO, UTI Capital Ltd said that long-term pension funds and sovereign wealth funds are expressing interest in funding infra projects. The PPPs have not been successful because of aggressive bidding by the private parties. These players were considered as contractors, not partners, and were made to deal with the issues like land acquisition and environmental clearance on their own, he shared.
Funding crunch and deficit in structural contracts were the two pain points faced by the infrastructure projects said Mr Sidharath Kapur, President & CFO – Airports, GMR Group. Absence of Effective dispute resolution mechanism, structuring concession agreements which are bankable and regulatory certainty – absence of these are affecting growth and development of infrastructure, he added.
The 5th CII Banking & Finance Summit included four Panel Discussions focusing on ‘Linking the Unbanked Population to the Formal Banking System’, ‘Enhanced Role of Technology & Applications in Banking and Financial Sector’ and ‘Structural Reforms in the Indian Financial Sector’. This Summit witnessed a participation of around 225 delegates comprising of corporates, infrastructure companies, banks, insurance companies, financial intermediaries and merchant banks, AMCs, technology players in BFSI space, PEs & VCs, multilateral agencies, policy makers & regulators, finance professionals, debt syndicators, economists, academia etc.