CONTENTS 1: Understanding Project-Finance 1-10 Definition of Project and Finance Inter-relationship of Project-Financing and Infrastructure Financing Basic Features of Project-Finance Components of Project-Finance Sources of Project-Finance Project Evaluation Methods Practical Application Final Comments on Project Eva'uation Methods Project Risk Analysis Project Completion Audit 2: Infrastructure Anatomy 11-26 Infrastructure Defined Types of Infrastructure Distinction between Physical Infrastructure and Social Infrastructure Scope and Importance of Infrastructure Development World Scenario Infrastructure Gap in India Visible Growth Public Private Partnership What is Exactly Public Private Partnership (PPP) in Infrastructure? Why Private Sectors are Interested? Some Myths about Infrastructure Development Regulatory Challenge Regulatory Capture Corporate Governance Issues 3: Finance for Infrastructure 27-38 Why Institutional Finance Necessary? Project Finance/Object Finance Approach Detailed Points of- Distinction between Project Finance and Object Finance What is then Status of Infrastructure Project? Salient Features of Financing Take Out Financing Infrastructure Operation from Funding Angle Build, Operate and Transfer (BOT) Model Parties to BOT Projects Special Features of BOT Model Buy Back Mechanism Escrow Account Mechanism for Infrastructure Project Features of an Infrastructural Escrow Account 4: Accounting Ratios in Infrastructure and the Projects 39-46 Functional Role Various Accounting Ratios and Standards for Infrastructure Process Off-beat Accounting Ratios (Especially Applicable for MNCs Involved in R&D Intensive Projects) Insurance Element in Accounting Ratio 5: Credit Rating for Infrastructure Projects 47-56 Utility of Credit Rating for Infrastructure Projects Usual Parameters for Credit Rating Specimen Format Steps Credit Rating for Infrastructure Projects to be Undertaken Is there any Need for Undertaking Credit Rating since all Infrastructure Project Fundings are Backed by Extensive Viability Studies? 6: Techniques of Infrastructure Lending 57-70 Basic Guide Posts Criteria for Financing: RBI Directive Appraisal Standards: RBI Directive Viability Studies by Approved Consultants Modality of Computation of Need-based Financial Accommodation Precautions in Assessment Model Application Form for Financial Assistance 7: Regulatory Framework 71-82 RBI Directive Implications Fair Practices Code: RBI Directive Recent Regulatory Initiatives in India Due Diligence on the Part of Lenders What Remedies Available to the Borrower when a Lender has not Complied with FPC? Some Common Instances of Grievance of Borrowers Falling within FPC Long-term Resource Raising by Banks for Infrastructure Lending Implication of State Government Guarantee for Infrastructure Lending 8: Terms and Conditions of Sanction and Security Documentation 83-90 Reasons for Spelling out Terms and Conditions Standard Structure of Section Terms and Conditions for Lending to Infrastructure Company Other Terms and Conditions 9: Case Studies on Infrastructure Lending 91-128 1. Case Study of Road Project 2. Case Study on Power Generation Project 3. A Recent Large Case of an Infrastructure Project in India 4. Project Finance (Large & Medium Industrial Units) Cases for Analysis & Evaluation 10: Post-Disbursement Supervision 129-136 Why Post-disbursement Supervision? Overall Guidelines of Reserve Bank of India for All Types of Borrowal Accounts Some Check Points Modality of Physical Inspection of Securities/Operation of Power Project 11: Accounting Standards and Audits 137-142 Accounting Standards in India Twenty Nine Indian Accounting Standards Overall Classification Compliance Issues: Infrastructure Projects Statutory/Concurrent Audit 12: Risk Management Implications 143-148 Infrastructure Risk Segmentation Basel-II Risk Management Implications Asset-Liability Mismatch Disclosure of Exposure to Infrastructure Sector Is there any Special Incentive for Lending to Infrastructure Sector from Basel II Angle? Should there be any Credit Guarantee Organisation as an Effective Risk Mitigant? 13: Recovery of Non-Performing Accounts 149-156 NPA Defined Quick Mortality Diversion of Funds by any SME - Who is to be Blamed? Acti on Flow Chart in NPA Recovery in Case of Infrastructure Advances Recovery Window through Sarfaesi Act, 2002 - Effectiveness in Case of Infrastructure Accounts Staff Accountability Main Points in Staff Accountability Studies on Credit Quality Slippage ANNEXURE 157-160