Who will finance long-term investments?
Madan Sabnavis IN the recent past, the RBI has voiced two related concerns. The first is a resuscitation package for IDBI, which could be a precursor to a similar bailout for IFCI. The other pertains to the provision of long-term project finance as the focus of banking has changed. Both these thoughts smack of irony in the context of universal banking, which has been permitted, albeit in haste. As can be seen, there is a glaring contradiction here, which has implications for long-term growth. The problem today is that there are few sources of long-term funds available for potential investors. The capital market is moribund, and the DFIs would rather not like to be so defined. They are, in fact, shying away from term finance. FDI is an option but we get in not more than $3-4 billion per annum, which does not amount to much. ICICI has merged with ICICI Bank, so why can’t IDBI or IFCI. Nothing wrong in this logic, except that these institutions were set up with the purpose of fostering lo
