Mumbai: State Bank of India (SBI) and Life Insurance Corporation of India (LIC) yesterday signed an MoU, which is expected to remove the asset-liability mismatch for the bank in financing long-term projects and provide LIC the opportunity to increase its exposure to the infrastructure sector.

A K Purwar, chairman, SBI, said that with this MoU, the bank's disbursement to infrastructure will double in the next one year.

"In the current fiscal, the bank has so far sanctioned loans worth Rs6,000 crore to infrastructure projects. Loans amounting to Rs2,500 crore have been disbursed of the targeted disbursements of Rs7,000 crore this fiscal. We expect the disbursals to the power sector to form 10 per cent of our loan book," Purwar told newspersons after signing the MoU.

SBI's total exposure to the infrastructure sector stands at about Rs27,000 crore.

"This partnership will result in significant improvement in the infrastructure sector," said Purwar.

While SBI will evaluate the projects and fund them for short term (up to five years), LIC will take the long-term risk. The bank will continue to monitor the project till the entire loan is repaid.

The agreement also provides for a switch of assets from one institution to another.

It is targeted at infrastructure projects both in the public and private sectors, covering power, telecom, ports, roads, airports, tourism, agri-processing and warehousing. The MoU will enable LIC to meet its regulatory requirement of investing 15 per cent of its funds in infrastructure and social sectors, said S.B. Mathur, chairman, LIC. "The money and the willingness to finance were always there but the projects were missing," he said.