"The SPV will be running in 4-6 weeks," Finance Minister P Chidambaram said in New Delhi at a post-budget meeting organised by the CII.

He said the SPV would fund private and public sectors as well as joint ventures between the two. Chidambaram said most of the projects, which would have to import equipment, could use up $2-3 billion in foreign exchange.

The banks would provide short-term loans up to five years, while the SPV would lend for long term. "While banks would provide the front-end part of the loan, the SPV would provide the back-end," he said.

The projects would be appraised by an inter-institutional group of banks and financial institutions. The SPV will lend funds, especially debt of longer term maturity, directly to eligible projects to supplement other loans from banks and financial institutions.

The government will communicate the borrowing limit to the SPV at the beginning of each fiscal. For 2005-06, the Finance Minister had fixed the borrowing limit at Rs 10,000 crore.