Great ideas bring a significant change in the world. An idea is turned into a reality with persistent efforts and effective planning. Infrastructure sector is one such sector where ideas are turned into innovation. But such innovative projects require adequate funding as well to turn the idea of any project into reality. The infrastructure sector is the spine of the economy. Hence from time to time, development is required to ensure the financial stability of any country. Earlier the government sector was solely vested with the responsibility of providing funding to the infrastructure sector. But the need for progress in modern times has brought the private sector's interest to invest in the upcoming projects for the infrastructure sector. It has changed the game of the infrastructure sector. The government sector is sometimes unable to provide financing for infrastructure projects due to inadequate budgetary resources and other constraints. Hence in order to meet the level of world-class infrastructure of developed countries, the private sector involvement is mandatory now.
While obtaining the financing of infrastructure projects, banks, or other financial institutions lookout for projects that can give good returns and are bankable. A project undertaken by either public or private sector is only eligible for funding if it meets the following conditions:
The amount permitted for the infrastructure project must be within the prudential exposure standards as given by the RBI.
The financial institutions such as banks must have relevant expertise in analysing the bankability potential, risk analysis, technical viability etc. of the infrastructure projects. It ensures that the project can generate adequate profits/returns once it is initiated.
In case the project is initiated by the public sector units, a term loan is permitted only for the corporate entities. They need to be registered under the Companies Act or must have a similar stature. If sanctioned, these term loans cannot act as a substitute for the budgetary resources. While providing financing for infrastructure projects, the banks and financial institutions should support the projects that have the ability to perform well.
In other cases, banks may also provide financing to the special purpose vehicle ( SPV ) that are registered under the companies act made for financing of infrastructure projects. Banks can also make sure that in case of bankruptcy or financial hassles, the SPV's finances are not disrupted.
The following is the process of financing the infrastructure projects that must be followed by the clients:
Complete the entire loan application and submit the business report according to the standards and requirements of the bank to get fast approval. Go through the terms and conditions in depth before signing the loan agreement while obtaining financing for infrastructure projects.
Infrastructure projects are a huge investment, and the profits you earn can be used to repay the loan you have taken. Always associate with a top investment bank like Resurgent India to make the process smooth and quick for yourself. It is the time to obtain funds, invest them and reap the benefits to make your business dreams come true and take it to great heights.