Asset Monetization in Railways, Roads: Pandey

Mumbai, Sep 18 (PTI) Capital markets regulator Sebi's chief Tuhin Kanta Pandey on Thursday said there is a need to "accelerate" monetisation of government-held assets in sectors such as railways, roads, airports and energy to help funnel investor money into such projects.

The career bureaucrat, who headed the Department of Investment and Public Asset Management before being appointed as a regulator, rued that a bulk of state governments are yet to draw plans on asset monetization and stressed that addressing this gap can help give boost to infrastructure creation by opening up resources.

Infrastructure requires capital in "massive quantities", and the government and banks should not carry this burden by themselves, Pandey said, making a pitch for the capital markets as an alternative to gather the resources.

He said the asset monetisation plan of the central government played a key role in the development of the market for infrastructure investment trusts (InvITs) in the past.

"Going forward, there is a need to accelerate asset monetization in various sectors such as roads, railways, ports, airports, energy, petroleum and gas and logistics," he said, addressing an event by the NaBFID.

He said the asset monetization can happen through a slew of routes, including InvITs, real estate infrastructure trusts (REITs), public private partnerships or securitization.

Pandey also said that while the amount raised through municipal bonds at Rs 3,134 crore through 21 issuances since 2017 may look impressive, there is a need to deepen and diversify the investor base by encouraging institutional investors like mutual funds, pension funds as well as retail investors to systematically allocate to infra securities.

"Relying solely on banks or government budgets exposes us to concentration risk. Markets, on the other hand, offer a palette of instruments like corporate bonds, index rates, municipal bonds," he said.

Capital markets enforce discipline, transparency and governance through disclosure norms, independent audits and investor scrutiny, he said, adding that they act as "guardians of quality and credibility" in infrastructure projects.

Meanwhile, speaking at the same event, NaBFID's managing director and chief executive Rajkiran Rai expressed concerns on the declining interest among scheduled commercial banks in the infrastructure lending space as compared to other sources like non bank finance companies and dedicated infrastructure debt funds.

Bank lending has actually de-grown, while the same for the non-banks is growing at about 10 per cent, he said, adding that a "lot of push" is needed.