UTI Bank

New Delhi, Mar 13 (UNI) UTI Bank today entered into an agreement with India Infrastructure Finance Company Limited (IIFCL) to provide an impetus to the financing of infrastructure projects in the country, whose requirements have been placed at 350 billion dollars in the next few years.

"The bank has realised that there are huge opportunities in the field of infrastructure financing which can be tapped in order to offer customised solutions in the area of project advisory, lending, and structured finance," UTI Bank Chairman and Managing Director P J Nayak told newspersons here.

The event was also addressed by IIFCL Chairman S S Kohli who highlighted the emerging opportunities in the area of infrastructure and the need for innovative funding.

Mr Kohli said, "the Indian Growth story is for real and intact," but argued that if adequate investments do not flow into the infrastructure sectors, then the high growth rate of eight per cent plus per annum may not be sustainable. The opportunities that are unfolding relate to sectors like roads, ports, airports, power and telecom.

In this regard, he added that a pick up in the infrastructure sectors will give a fillip to the core sectors of the economy, like cement and steel.

Mr Nayak said the UTI Bank's experience in mobilising resources at low cost and its growing client list of customers in the area of infrastructure would enable it to bring deals for funding from IIFCL.

Under the MoU that was signed on the ocassion, UTI Bank and IIFCL propose to co-operate and complement each others capabilities in the areas of creating deal flow of infrastructure projects that could be structured along commercially viable lines, including initial scrutiny and project definition, undertaking, commercial due diligence and credit appraisal, syndication of funds and co-financing of projects.

Mr Nayak said the sanctioned amount for the present infrastructure portfolio was of the magnitude of Rs 6,000 crore and actual lending has been of the order of Rs 3,800 crore. He said 28 per cent of total lending is for the retail sector. Total advances of the UTI Bank were of about Rs 32,000 crore.

To a question relating to the RBI putting the breaks on monetary expansion, Mr Nayak admitted this would slow down credit growth and could lead to rescheduling and lending to the manufacturing and infrastructure sectors. "Some form of lending to the infrastructure sector would not take off," Mr Nayak said.

In the areas of infrastructure where there are price controls, there could be some dampening effect.

Besides, the private sector was likely to be affected more than the Public sector involved in the building of infrastructure because it has recourse to budgetary resources.

In the next financial year, Mr Nayak expected a hefty growth of 30 to 40 per cent in retail sector and added that almost 100 per cent of the lending in the infrastructure to projects pertained to Public - Private Partnership.

Mr Kohli was of the view that interest rate scenario needs to be viewed in a long term perspective as infrastructure development pertains to the long run. He said the US Fed was expected to cut interest rates by 75 basis points and some other indicators were a pointer that interest rates would stablise in the long run.

IIFCL, established in January 2006, is a wholly-owned enterprise of the Indian government. It has been formed under a special scheme of the Central government based on the premise that projects in infrastructure need to be funded through a financial Special Purpose Vehicle.

UTI Bank is a medium-sized bank with a network of 518 branches in 306 cities, towns and villages. The bank is one of the leading syndicators of debt, with special focus on the infrastructure sectors.

UNI