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 Infrastructure Debt Funds (IDFs).