India mulls private banks for $1.5 trillion infrastructure gap

India is considering turning to the private sector to help plug a chronic shortage of capital for infrastructure projects.

The Reserve Bank of India (RBI) is proposing Asia’s third-largest economy offer licences to private companies to set up infrastructure banks. That could help finance $1.5 trillion in roads, ports, power and other projects over the next 10 years and bridge a gap that ratings agency Standard & Poor’s says is shaving off almost 5% of the country’s gross domestic product.

“Specialized banks could cater to the wholesale and long-term financing needs of the growing economy and possibly fill the gap in long-term financing,” the RBI said in a discussion paper released from Mumbai on 7 April. Read More…