ABSTRACT
This chapter reviews the salient features of project finance structure, various sources of project finance, characteristics of project finance loans and issues associated with improving of project finance sources in the Indian context. It describes the concept of project finance, its contrasts with conventional corporate finance and value creation through project finance. The chapter focuses on sources of project finance, risks of large investment projects and a review of the characteristics of project finance loans. It outlines the status of public-private partnerships (PPPs) in the Indian context and policy issues on project finance. The chapter concludes by identifying important issues that make project finance structures in PPP mode successful. Risk analysis is primarily a due diligence process intended to ensure that all the necessary information about the project is available to the lenders. Use of project finance by private corporate entities for financing large-scale high-risk projects is more popular in the United States and other developed countries.
