A Parliamentary Standing Committee has expressed concern over a large chunk of about Rs75,000 crore of loans extended to the road sector turning bad. Observing that loan disbursed by banks in excess of an estimated project cost is “strange”, the panel has instructed NHAI (National Highways Authority of India) to keep a watch on the excess loan amount obtained by the developer. The panel has specifically raised questions about huge loans advanced to Jaypee Infratech turning into NPAs.
“Some of the banks have given information on total loan (Rs74,088 crore) given to the road sector... For IDBI, the NPA percentage is as high as 52 per cent of loan disbursed for the road sector. The committee wants to know the reason why this huge amount has become NPA, that too to a single concessionaire, Jaypee Infratech ltd,” the panel chaired by Kanwar Deep Singh said in its latest report.
Seeking full details of the project awarded to Jaypee, the 33-member standing committee on transport further observed that the State Bank of India has lent Rs19,502 crore out of which Rs1,986 crore has slipped into NPAs.
The SBI submitted before the committee that the projects may be approved only after ensuring 90 per cent of land acquisition is completed. The panel said, “The committee finds it strange as to how the concessionaire who has got a project for Rs1,000 crore gets Rs1,400 crore for the same project.”
It also asked as why the concessionaire has been given a free hand to get the bank's loan as per their wishIJ
Projecting that total NPAs of Rs2.6 lakh crore may go up to Rs4 lakh crore because of defaults, the panel recommended that banks be empowered more to make recovery of bad debt.
Asking the Government to consider empowering the banks adequately to make recovery of bad debt easier, it said, “For example, in the case of a default, the banks may be allowed to take over the entire company.”
It also noted SBI’s contention that all approvals from statutory authorities and clearances from Government agencies should be obtained before a particular project is sent for bidding. “Another area of discord is the project cost estimated by NHAI and the concessionaires, which results in lending delay by financial institutions,” the committee said.