Mumbai, Nov. 7: Nearly two months after three public sector banks came together to form an alliance, the process is being replicated with Union Bank of India, Bank of India and the Infrastructure Development Finance Corporation (IDFC) set to cast a similar arrangement.

The trio is coming together to jointly fund large projects apart from cooperating in other areas as well.

While the broad details of this alliance will be formally announced tomorrow, it will largely use the strengths of each participant in the area of funding infrastructure projects.

The pact is, therefore, expected to be a win-win one as it will enable BoI and Union Bank to take exposure in large projects and the expertise of IDFC will also come in handy.

“A bank cannot undertake funding of big projects on its own. Both funds and expertise are needed. When banks enter into such an alliance, they are better equipped to finance a project. In this case, despite both Union Bank and BoI having corporate clients, their exposure to infrastructure or large projects are not significant,” said an analyst.

Like other commercial banks, both BoI and Union Bank have been largely concentrating on the retail front over the past couple of years. Bankers said the alliance will help them diversify their asset base. IDFC will stand a better chance of funding such projects through the alliance.

IDFC, which made gross disbursements of Rs 6,045 crore for the fiscal ended March 31, has largely focussed on funding energy, telecommunications and transport projects over the past few years.

However, the institution has been adopting various initiatives to expand its product suite. Recently, it picked up a 33.33 per cent stake in SSKI, the privately-held corporate finance and institutional securities company, for Rs 100 crore.

In mid-September three nationalised banks — Oriental Bank of Commerce, Indian Bank and Corporation Bank — came together to form the OIC alliance. One objective of the alliance was to pool their strengths in project financing.

Under the OIC alliance, the banks decided to share their treasury and IT resources and build a common e-payment system. Customers of one bank could use the ATM of another bank. Moreover, customers of one of these banks could use their existing branches to remit money into the branch of another bank in a different location.

In today’s alliance, IDFC has been specifically roped in to fund infrastructure projects. Bankers do not rule out the possibility of BoI and Union Bank sharing their resources on the retail front as well.