For starters, the government's package authorises IIFCL to raise Rs 10,000 crore (Rs 100 billion) through tax-free bonds to be able to refinance banks and other financial institutions that lend money for infrastructure. If the IIFCL experience is a happy one, permission to raise more funds will also be considered.

Certainly, Kohli's track record suggests raising the money shouldn't be a problem - he is the longest-serving bank chairman in the country (he was chairman of Punjab National Bank [Get Quote] for five years and chairman of Punjab and Sind Bank for four years) and has been known to have said that Indians, not foreigners, will have to fund the country's infrastructure development in the current global environment.

The plan is that the five-year tax-free bonds will carry a coupon rate of 7.5 per cent - once you take into account the 25 basis point fee the government's sovereign guarantee will cost IIFCL, the loans can be lent to banks at around 8.5 per cent.

The original proposal was that the Reserve Bank of India [Get Quote] would give IIFCL's overseas subsidiary access to around $10 billion of forex reserves to fund infrastructure, but the central bank wasn't keen on this.

That's when the tax-free bond route was suggested by senior Planning Commission officials. IIFCL plans to raise the first tranche of Rs 3,000 crore (Rs 30 billion) later this month through a private placement and is also planning to come out with a public issue shortly.

In addition, RBI has also given a $5 billion letter of credit to IIFCL - this will be routed through an offshore subsidiary to provide forex loans to Indian infrastructure firms, to meet their capital expenditure outside India.

As PNB chief, Kohli ensured the bank was one of the first to implement a core banking solution (this allows you to conduct business from any PNB branch, regardless of whether or not your account is in that branch) and ensured PNB adopted the latest technologies.

He also listed PNB on the bourses. Kohli has been chairman of the Indian Banks' Association (a forum for promoting the interest of banks) for two terms and has chaired several committees associated with financial sector policy. The committees he chaired dealt with a variety of issues relating to SME financing, willful default in loans, financing of the sugar industry and reconstruction of distressed small industries.

Within the short time since its inception (it was created in April 2006 with Rs 100 crore (Rs 1 billion) of capital), IIFCL has emerged as a nodal agency for financing infrastructure projects.

It has sanctioned $3.7 billion of financial assistance to 101 infrastructure projects which have a project cost of over $29 billion - no other financial intermediary in the country has lent as much in such a short time. Almost 90 infrastructure projects have already achieved financial closure because of IIFCL.