artificially fixed without regard to the normal time taken for executing such projects. while a conservative estimate of the completion time will reduce the project cost, it can potentially sow the seeds for stress in the form of time and cost overruns. if one takes a close look at the reasons for extending the time for achieving dcco, many are anticipatable and would not be good enough to be considered force majeure. second, in many cases, the repayment schedule was not drawn commensurate with cash flows. there was the prevarication to recover the loan in a much shorter time frame than the project ’ s revenues would permit. this invariably stressed the entity, very often leading to repayments being managed through fresh borrowings and the like. this in turn, adds to the cost and builds stress. we have addressed this by making clear that banks can recover the loans over 85 percent of the economic life of the project so that further stress is not built because of how the repayment schedules were drawn in the past. third, there were some force majeure factors like change in policies, non - availability of raw material, and the like. so what should be done to harness this potential opportunity both to contribute to the nation building and at the same time make it a win - win for all? i think the answer lies in avoiding the pitfalls of the earlier experience. we need to get the project appraisal done the right way. ensure that all risks are identified and the project schedule is reasonable. financiers of infrastructure projects should have the right risk appetite and also the ability to assess the fundamentals of a project, the appropriateness of its design and the reliability of the projections. it has to be ensured that there is a proper mix of financing instruments and sources, and the right levels of leverage. 4 / 5 bis central bankers'speeches use of corporate bond market to raise a part of the project funds should be encouraged. repayment schedule should be properly drawn up and aligned with expected cash flows. pricing of the loans should be commensurate with risk and provide for flexible financing that recognizes the change in risk profile of the asset. way forward a paper on infrastructure financing by bis states as under : “ on financing side, challenges remain. currently, infrastructure finance is dominated by direct equity investments and bank loans. boosting infrastructure finance will require the broadening of the potential group of investors and the tapping of the vast financial resources of capital markets

look at the data : this phenomenal growth brought in its wake certain undesirable consequences, like high stressed assets. more of this later. a few economic characteristics differentiate infrastructure assets from other asset classes. 1 / 5 bis central bankers'speeches these characteristics also make it more difficult to match investment demand and financing supply : firstly, infrastructure projects are often complex and involve a large number of parties. infrastructure often comprises natural monopolies such as highways or water supply, and hence governments want to retain the ultimate control to prevent an abuse of monopoly power. this requires complex legal arrangements to ensure proper distribution of payoffs and risk - sharing to align the incentives of all parties involved. secondly, infrastructure projects are long term and are therefore subject to various risks including those due to changes in policies, delays in clearances, etc. every event that delays the implementation of a project leads to cost and time overruns that in turn have a bearing on the techno - economic viability of the project or would necessitate revision in the price of the endproduct. very often the infrastructure products are meant to serve public good which imposes a limitation on ability to determine their price. thirdly, where debt financing is dominated by the banking system, the fundamental problem posed by the asset - liability mismatch is critical. in india, the dominance of psbs may partly offset this risk because the perceived assurance of government backing provides the requisite flow of deposits. because of these reasons, there are always challenge in financing infrastructure. at the same time, infrastructure sector will be a key driver for the indian economy. given the high priority that the government is according to the infrastructure sector, there is no gainsaying the enormous potential for financing the sector. as per an estimate, india needs rs 31 trillion ( us $ 454. 83 billion ) to be spent on infrastructure development over the next five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments. it is essential that the stakeholders take the right steps to participate in this move and also make a decent return from this opportunity. let me quickly recall here some of the important measures that the rbi has taken to help flow of funds to infrastructure : 1. in view of the fact that projects take long time to implement during which the interest cost is part of the project cost, the importance of a specified time for commencement of commercial operations is high. taking into consideration the different reasons due to which project implementation can be delayed,