At a time the government is busy preparing its core sector agenda for next 100 days, the public sector banks have demanded a set of special budgetary provisions from finance minister Pranab Mukherjee to ensure higher credit flow into the infrastructure sector.

Among the demands, PSB chiefs who met Mukherjee on June 10 have put forward two main issues ? creation of a new class of long-term deposits with tax exemptions and relaxation of norms pertaining to non-performing assets (NPAs).

Bankers who had attended the meeting have confirmed that the finance minister had discussed these two key issues with them and had assured that the government would respond to these matters.

?In fact, FM had instructed finance secretary Ashok Chawla and RBI deputy governor Usha Thorat who were also present in the meeting to take note of these demands,?? said chief of a large public sector bank.

The bankers said the government was likely to provide some sops to the banks during its forthcoming Budget so as to give a fillip to the infrastructure financing. Similarly RBI is also expected to liberalise its norms for the infrastructure funding.

Banks have argued that although they are the major financiers for infrastructure projects in the country, they are hesitating to finance such projects with long gestation period ? often ranging between seven and fourteen years, as they don?t have enough long-term resources. The banks find it difficult to mobilise resources beyond five years.

?To overcome this problem, we have suggested that government should allow us to float long-term deposits or go for bonds which should be eligible for tax exemptions,?? said another banker who had also attended the meeting.

The bankers are of the opinion that it would be further difficult for them to raise long-term resources at a time when the rates are falling.

?But the government wants us to focus on financing core projects on an urgent basis to push the falling credit flow and check economic slowdown,?? said the banker.

Allen CA Pareira, chairman and managing director of state-run Bank of Maharashtra, said, ?We want that the tenure for deposits must be extended beyond five-year.??

To add to the bankers?s woes, a majority of infrastructure projects are stuck because of various issues ranging from land litigations to political turmoil. Consequently, completion of these projects often gets delayed and bankers have to mark them as NPAs as the guidelines issued by RBI says that loan provided by banks to any infrastructure project will be classified under the NPA category in case the project doesn?t start paying back its loan after one year.

Infrastructure projects generally get delayed for no fault of the borrowers. So, in such cases the NPA norms must be relaxed by the RBI,?? said Pareira.

It will help us restructure such loans and prevent them turning into NPAs, he added.

It is despite the fact that the UPA government at the Centre is focusing its attention on the development of the ailing infrastructure sector to ensure a 6-7% GDP growth.

Particularly on the power sector, they said although the legal, policy and regulatory frameworks were already in place, the implementation issues have not been adequately addressed. Payment of security is still a major constraint to financial closure of large projects, underscoring the need for accelerated distribution reforms with accent on private sector participation.

The bankers have also suggested that since the projected infrastructure financing requirement is estimated around $500 billion in the next five years, a legal framework for the working of consortium of long-term financial institutions such as insurance companies, provident and pension funds and NBFCs be in place for financing infrastructure projects with public and private partnership.

The bankers say that domestic savings need to be supplemented by foreign equity of $5-7 billion per year in infrastructure.