the past twenty years. though the issues thereat had been predominantly in the form of bonds and debentures, the growth in size has been very reassuring. it gained popularity from mid 1990s ; from 1995 – 96 to 2000 – 01, this market raised 752 billion, in the next ten years, it helped raise 7614 billion and in fiscal 2011 – 12 and 1012 – 13, this market raised 2009 billion. 9. while we are happy that banks have been doing such a wonderful yeoman service for the growth of the economy, will we be happy to continue to depend on bank financing as the predominant mode? are we compelling the banks take too much risk, thereby endangering the depositors ’ money? 10. however, taking note of the predominant position of banks in the indian financial system and taking a realistic view, can we expect the bank finance to comprehensively cater to all types of investment needs? irrespective of whether it is short, medium or long term, or whether it is loan, debt or equity financing, or it is with low, medium or higher risk propositions? should we turn our banks like the universal banks in germany, catering to every type of investment demand of the entire economy? 11. or, alternatively, should we develop capital market so that it can cater the increasing need for investment and also risky investments? like those in the usa? 12. these are sets of questions that we need to ponder over and take strategic decisions. twelfth plan 13. 12th five year plan aims to usher in faster, more inclusive and sustainable economic growth. it notes that today, india can sustain a gdp growth of 8 percent a year. increasing this to 9 or 10 percent will need more mobilization of investment resources ; better allocation of these resources through more efficient capital markets ; higher investment in infrastructure through both public and ppp routes ; and more efficient use of public resources. 14. twelfth plan has ambitious target for investments to usher in high growth rate of 8 percent during 2012 – 17. it aims to mobilise resources worth 5. 4 trillion. the total public sector investment in infrastructure envisaged in the twelfth plan is 16 trillion by the centre and 12. 89 trillion by the states. investment by the private sector, which includes ppp projects, makes up the balance of 26. 83 trillion, which is 48. 14 percent of the required investment during the twelfth plan, a much higher share than the anticipated 36. 61 percent during the eleventh plan.

% and 12 %, respectively. 20. i am happy to note that the issues deliberated today are those that are likely to shape the future of the industry, going forward. i would like to take this opportunity to share with you my views on some of these and other related concerns, which, as i see it, will shape the contours of the industry in the years ahead. financing of infrastructure 21. the first issue, which immediately comes to my mind, is the issue of infrastructure financing. i am sure that this issue will also be uppermost in your minds as well. inadequate infrastructure exerts a cascading impact on the economy, negatively affecting productivity, employment, personal income and international competitiveness and costs. the 12th five year plan as mentioned earlier has estimated the infrastructure requirement at around inr 56 trillion, with a gradually increasing role for the private sector. given the limited fiscal headroom and the long gestation lags involved in its fructification, there is a need to rope in long - term providers of funds. can banks chip in? yes and in fact has already done so. as the capital market ’ s significance has been waning, bank finance for infrastructure steadily grew. the outstanding bank credit to the infrastructure sector, which stood at 72 billion in 1999 – 2000, has increased to 7860 billion in 2012 – 13, registering a compounded annual growth rate ( cagr ) of over 40 per cent against an overall cagr of bank finance to all industries at 20 percent during the same period. however, this kind of growth and the general economic downturn and policy conundrum have resulted in concentration risk for banks ( infra funding is as high as 15 % in bis central bankers ’ speeches the banking books ) ; banks are saddled with large scale stress assets in the infra segment. further, there is the structural problem of using short term nature of the bank funds for very long term funding. banks did evolve a midway solution, of medium tenor funding for 12 to 15 years. this, though solved the initial problems, is fundamentally a weak arrangement and the recent stress period has brought the cracks into open. banks will have to appropriately structure their infrastructure lending keeping in view their asset - liability mix ; they also may have to raise long term resources. they should develop long - tenor fixed rate or floating rate products or develop appropriate hedging instruments to tackle counterparty and other risks. takeout finance is another possible solution, as do