Bank loans to infra projects are secured lending: FinMin

The Finance Ministry today said loans extended by banks to infrastructure projects, especially in the roads and power sector, will be treated as secured finance even in the absence of tangible collaterals.

"This implies that the rights, licences, authorisation, etc., charged to the banks as collateral in respect the debts of infrastructure projects being implemented under PPP mode and having model concession agreements will now be treated as secured lending," the Finance Ministry said in a statement.

However, the earlier notification of RBI did not reckon intangible securities such as rights and licence, it said.

The move is aimed at boosting infrastructure financing, especially for the projects in roads and power sector as debt to such projects are costly, as well as risky and unsecured, it said.

The new projects will be immediate beneficiaries, as banks will find them more comfortable and attractive for financing, it added.

Earlier this week, Finance Minister P Chidambaram had called the stalled projects worrying.

He had said steps were being taken to ensure that the impediments are removed and credit flow takes place.

As many as 215 projects with an investment of Rs 7 lakh crore are currently stalled and banks have disbursed about Rs 54,000 crore loan towards it, Chidambaram had said.