Manila based multi-lateral funding agency Asian Development Bank (ADB) will provide $ 400 million (Rs 2,472.4 crore) loan to boost private investment in the infrastructure sector in the country.
"The ADB and the Government of India today signed an agreement for USD 400 million first tranche loan under the Accelerating Infrastructure Investment Facility in India (AIIFI) to support the government's efforts to accelerate infrastructure growth through increased private sector investment," ADB said in a release.
The first tranche of the loan is part of ADB's USD 700 million mutli-tranche financing to state-owned India Infrastructure Finance Company Limited (IIFCL).
The loan proceeds will be used to advance direct loans for project developers and to take out bank loans.
Loan agreement was signed by Nilaya Mitash, Joint Secretary, Department of Economic Affairs in the Finance Ministry and Narhari Rao, Officer In-Charge, ADB India Resident Mission.
"This assistance to IIFCL will allow it to lead the market evolution for infrastructure financing and catalyse greater private sector investment," said Mitash.
Mitash said the loan will support public-private- partnership infrastructure projects in roads, power, including clean and renewable energy, and water supply and sanitation through financial modalities like direct lending, take-out financing, and subordinate debt.
"Infrastructure investments will encourage growth and jobs...The IIFCL loan will spur investment in infrastructure that the country urgently needs to ensure strong economic growth," said Rao.
The latest financing for IIFCL comes on top of a previous USD 500 million loan facility approved in 2007, which helped fund 30 public-private partnerships, including the Delhi and Mumbai international airports, and a further USD 700 million approved in 2009, which is still being disbursed, ADB said.