##ter settlements. unplanned urbanization has also entailed other problems ranging from crime, law and order, pollution, congestion and environmental degradation. 29. expanding urban infrastructure demands huge resources. isher judge ahluwalia and others have estimated that investment requirements for urban infrastructure over the twenty year period 2012 – 2031 would be about 40 trillion which translates to an annual average investment of about $ 100 per capita. mobilizing resources of this order is obviously a big challenge and will call for more effective taxation, efficient project planning and implementation, innovative urban governance and much greater sensitivity to embracing the migrants into the urban ecology. fifth challenge : bridging the infrastructure deficit 30. it is widely acknowledged that infrastructure deficit is by far one of the most binding constraints to accelerating growth. even so, our efforts to bridge the deficit have fallen way short of the task. the eleventh five year plan projected investment in infrastructure of $ 500 billion but the final expenditure is likely to fall well short of that. the twelfth plan doubles the projected investment over the five year period 2012 – 17 to $ 1 trillion which means that annual investment in infrastructure has to increase from the current level of 6 per cent of gdp to over 10 per cent. 31. given its fiscal compulsions, the government will clearly not be able to mobilize resources of this order. the twelfth plan projections call for 50 per cent of the projected investment to come from the private sector and much of the project implementation to happen in the ppp mode. 32. infrastructure investment, therefore, poses three sub - challenges : mobilizing the necessary resources, reforming regulations and contractual arrangements and efficient project planning and execution. 33. let me make a comment here on the reserve bank ’ s efforts to support infrastructure financing. infrastructure requires long - term finance, and it should ideally be funded by long term sources like insurance and pension funds. since these markets in india are still not deep enough, the burden of financing infrastructure is falling on banks. banks cannot expand lending for infrastructure beyond a point because of exposure risks. in financing infrastructure, banks also face an asset - liability mismatch problem since their liabilities are largely short - term whereas infrastructure funding is typically long - term. 34. in order to support infrastructure financing by banks, the reserve bank has relaxed regulatory norms to the extent prudential limits would permit. these include higher exposure norms in respect of single borrowers and borrower groups, permitting banks to invest in infrastructure debt funds ( idfs

. some 25 % of all loans extended to smes in the crisis countries are currently deemed to be non - performing. and, as a banking supervisor, i am happy that banks are pricing - in the risks inherent to lending. it would be of only short - term benefit to the real economies of member states if banks were to extend credit without any close and critical look at the associated risk of default. enterprises, in particular small and medium - sized businesses, require a banking industry that is robust and does not immediately reduce its services whenever there is an even minor downturn in growth. in order to ensure that banks remain fit and able to provide financing also over the medium to long term, the risk for each individual bank needs to be in proportion to the return. why do i nonetheless regard targeted injections of liquidity, i. e. targeted longer - term refinancing operations ( tltros ), as appropriate? aside from differences in credit risk, we are observing that the improvements in financing terms and conditions are not being passed on to businesses and consumers, and that this is happening even though assistance programmes have already seen the implementation of far - reaching measures to adjust the balance sheets of, for example, spanish banks. the low fixed interest rate on, and the extended maturity of, the new targeted injections of liquidity offer banks a different set of incentives. we are ensuring planning certainty with regard to the cost of refinancing corporate loans and providing major help with respect to maturity transformation between longer - term lending and often short - term refinancing. this could make one or another loan for corporate customers economically viable without our having to assume any credit risks. allow me to recall here that the interest rates on our earlier three - year longer - term refinancing operations were variable. for banks, the greater uncertainty about the interest rate went hand in hand with greater uncertainty with respect to their own refinancing terms and conditions. bis central bankers ’ speeches the new longer - term refinancing operations have a different focus and will come to bear in an environment that has changed. potential side effects will thus have a lesser impact because yield spreads have narrowed considerably, the economic outlook has brightened and – although there are, of course, residual uncertainties – the banks have significantly improved their capital positions. all these factors should help make banks show less restraint in their lending. and in order to be able to fully benefit from the two refinancing operations of