Formation Of IIG Expected To Bolster Tourism, Hospitality Projects

Charmaine Fernz - Mumbai

Cyrus Guzder

Entrepreneurs in the hospitality and tourism businesses can now look forward to major assistance for their future projects from the Inter-Institutional Group (IIG). The formation of IIG, which was announced recently by P Chidambaram during his Union Budget 2004-05, assures investors reduction in transaction cost besides acting as one-stop-shop for any infrastructure project. The IIG is a banks’ consortium comprising financial institutions like IDBI, IDFC, ICICI Bank, SBI, LIC, Bank of Baroda and Punjab National Bank.

Urjit R Patel, chief policy officer, IDFC Ltd, said that the group has been set up to help an infrastructure project especially in the three specified areas of airports, seaports and tourism.

Disclosing the approach to be adopted by the consortium, he said, “An essential factor here is that only projects worth Rs 100 crore and above will be entertained by the group. This formation will essentially reduce transaction cost and act as a one-stop-shop for any infrastructure project.” He added, “One must also comprehend that the IIG will pool in resources on a ‘callable’ basis, and a sum of Rs 40,000 crore will be made available as and when necessary. This sum is not being given by the government.”

In general, key responsibilities of the set up would be to hasten the credit appraisal and extend the benefits to any sector whatsoever. Confirmed the official, “Other benefits would be fewer hassles in coordination as there would be a common documentation, wherein one entity from the group would do the appraisal of the project and then present it to the group resulting in less duplication and enhancing the commercial viability. IIG will ensure speedy conclusion of loan agreements and implementation of infrastructure projects.”

Commenting on the move, Cyrus Guzder, chairman and managing director, AFL Private Limited, said, “There is a two-fold advantage. Firstly, a substantial amount of money would be available and secondly, a more coordinated plan would be brought across all ministries ensuring better planning. One will however have to wait and watch how the concept, once implemented, works.”