Fiinovation: Alternative to Infrastructure Project Funds

The Government is still struggling to provide basic infrastructure facilities in every part of India. Despite
a growth rate of 8 per cent many of the rural places in India dont have basic infrastructural facilities like
roads, hospitals, electricity etc. Fiinovation believes that developing the basic infrastructure in every
corner of the country is a big task in hand. For which huge finance is required. Fiinovation believes that
the conventional channels of finance have their limitations. Usually financing of these projects is done
through banks. But banks fail to provide funds for the infrastructural projects which can take decades
to complete. These limitations are slowing down the projects directed towards developing the
infrastructure in India.
Fiinovation that Infrastructure projects have a long pay-back period, therefore they require long-term
financing. Banks which by far have been the main source of funding to these projects are unable to
provide long-term funding. Moreover banks are also approaching towards their exposure limits.
Fiinovation suggests the long term finance sources can be achieved by utilizing the pension and
insurance funds within the government. The repayment period of these funds is long as compare with
the loans taken from banks. This allows government to have a long term finance source for
infrastructure development funds.
The confidence of people on life insurance and pension plans during the recession has proved that these
two sources have huge financial backing to support infrastructure projects. Life insurance and pension
investment are done for longer term. LIC which is the leading insurance service provider company
recorded a growth of 18.85 percent in the year 2011-2012 surpassing the growth rate of banking sector.
This proves that an alternative to conventional banking sector is available. Fiinovation believes that this
source of finance should be utilized. Thus how we can ensure the smooth run of Infrastructural
development projects.
By
Karan Pundir
Media and Communication Team | Fiinovation