Govt, bankers discuss ways to fix stressed infrastructure projects

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Mumbai | Published: April 29, 2015 1:22:56 AM

While bankers found comfort in the government's initiative to discuss and fix problems in projects, the RBI was said to be highly reluctant in giving any more forbearance on lending to such projects.

With lenders’ asset quality under quite a strain, government officials and bankers met on Tuesday to take preemptive action on 85 infrastructure projects that entail R3.5 lakh crore worth of loans to prevent further slippages.

“There are many issues due to which infrastructure projects have stress — delays in approval, land acquisition and finalisation of power purchase agreements, no or less availability of fuel to power projects and the whole issue of coal linkage. All issues were discussed thread-bare among stakeholders today,” said Hasmukh Adhia, secretary of  department of financial services, at a press conference after the meeting.

Leaving out specifics, Adhia said the officials explored options wherein, through policy measures or collective action from banks, the projects could be revitalised.  A majority of these 85 projects are from the power sector, where the ministry would take a number of measures, such as a scheme to import gas through GAIL and financial assistance through a special power sector development fund (PSDF).

Noting that coal blocks have been re-allocated through auctions and another such auction will be conducted soon, special secretary of power RN Choubey said, “The problem has been solved for 65,000 MW of coal-based power projects and 24,000 MW of gas-based power projects entirely.”

While bankers found comfort in the government’s initiative to discuss and fix problems in projects, the Reserve Bank of India (RBI) was said to be highly reluctant in giving any more forbearance on lending to such projects.

Asked about the demands of bankers, SS Mundra, deputy governor of the Reserve Bank of India, said: “Prescriptions are already in existence, such as the 5/25 scheme. We have got viewpoints and suggestions and we will examine them.”

The level of NPAs and the stressed projects of public sector banks have been showing an upward trend in the last four quarters. Gross NPAs of public sector banks rose sharply to 5.33% in September 2014 from 4.72% in March 2014. Total distressed assets were about 12% of total advances as of December 2014. Around 4% of these 85 projects discussed are non-performing assets, while around 6% have been restructured, Adhia said. About 300 stalled projects involving a staggering investment of Rs 18.13 lakh crore are pending for resolution.

Representatives from the shipping and roads ministries and 13 lenders also attended the meet.

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