In a bid to fast-track stalled projects in the country, the Finance Ministry on Tuesday asked the Reserve Bank of India, public sector banks and other stakeholders to put in place a coordination mechanism to resolve the issues facing large infra projects so that investment cycles can be revived. These projects involve investment of Rs3.51 lakh crore of bank funding; and of these, 4 per cent have turned dud assets. “The main purpose was to understand the various reasons for stress in some infrastructure projects, have a better appreciation of what are the factors which are affecting the health of infra projects and also to put in place a coordinated mechanism for dealing with the stressed projects,” Banking Secretary Hasmukh Adhia told reporters after the meeting in Mumbai.
The meeting was chaired by Adhia with RBI Deputy Governor SS Mundra and Special Secretary at Union Power Ministry RN Choubey with the heads of public sector banks, REC and PFC, as many as 85 large infra projects in power, steel, roads and port sectors were reviewed. RBI Deputy Governor Mundra said some of the issues discussed were around inter ministerial clearances. “Discussions were held around the regulatory prescriptions and expectations. So, the RBI will certainly examine all those issues within the over-arching regulatory framework,” Mundra said.
Adhia added that factors such as delay in approvals and land acquisition, finalisation of power purchase agreements, lack of fuel availability/linkages for the power projects and coal linkage issue have led to stress in infrastructure projects. “Only 4 per cent of these (85) projects are NPAs. This is a preventive step as all the problems are common to many of them and we want to address those common problems by intervention of policy measure by the ministry or some collective measure by banks,” Adhia said.
SBI chief Arundhati Bhattacharya said if such meetings happen at regular intervals, many things can be put on fast-track and issues can be resolved quickly. She also said the amendments to the Electricity Act of 2003 are going to bring in competition and the dis-intermediation will actually make everybody efficient. However, Indian Bank Association chairman TM Bhasin said, “There were lot of issues with regards to JlF where the consortium leader was following one set of practices and other were not falling in line. So, today the decision has been taken that the all the banks have to fall in line in case 75 per cent by volume and 60 per cent by number the discussion has been finalised by the consortium leader.”
The banking sector was represented by 13 members including SBI’s Arundhati Bhattacharya, IBA chief T M Bhasin, IDBI Bank’s M S Raghavan, Andhra Bank’s S Rajendran, among others, apart from officials from Power Finance Corporation and Rural Electrification Corporation. The meeting assumes importance as corporates have started complaining that despite the best efforts at the government end, no work is happening at the ground level, indicated by the near flat growth in corporate loan disbursals by banks.