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Affiliation(s)

Manipal University Jaipur, Rajasthan; Nirma University, Ahmedabad, India
Manipal University Jaipur, Rajasthan, India

ABSTRACT

The management of risk is critical for creating a strong project financing market that, in turn, supports infrastructure development. Legal risk reduction is a crucial topic that must be addressed for the growth of the infrastructure industry and project finance. It anticipates regulatory incentives based on the expanding infrastructure sector’s demands. Over the last decade, it has been observed that India’s regulatory environment for taking action to address non-performing assets and the Reserve Bank of India’s (RBI) strict insolvency resolution norms for stressed assets has been cumbersome and does not give the infrastructure financing market any special treatment. The project financing industry has suffered a blow due to significant corporations like IL & FS and Dewan Housing Finance Ltd (DHFL) defaulting on payment commitments in the Non-Banking Financial Firm (NBFC) sector in 2018-2019. Furthermore, due to the Novel coronavirus (COVID-19) spread, India’s project financing business, which is dominated by banks (both government-owned and private), is already experiencing a downturn. Legal claims and many conflicts would arise if the project were to be disrupted. Due to increasing interconnectivity, a downturn in the project financing industry would send several shocks across the whole financial system. This situation has compelled the Indian government and authorities to take several significant moves in the lending and project finance markets. The author attempted to investigate the influence of recent financial sector failures and COVID-19 on structured project financing. This article examines how regulatory changes assist the practice in the structured financial market to revive and address difficulties while evaluating concerns and challenges in the infrastructure sector’s current structured project finance market.

KEYWORDS

project finance, structured finance, banking, non-banking financial companies, special purpose vehicle, infrastructure and policy

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