Relax lending norms for road projs: NHAI Chairman to RBI Gov

Seeking priority sector lending for highways sector given its multiplier effect on economy, NHAI today urged RBI Governor Raghuram Rajan to relax lending norms for road developers.
"We had a detailed an hour-long meeting with Reserve Bank of India (RBI) Governor. We sought his intervention into the trouble points in road sector lending including inclusion of projects lesser than Rs 500 crore in its 5:25 scheme," NHAI Chairman Raghav Chandra told PTI.
RBI has extended its flexible refinancing and repayment option for long-term infrastructure projects to existing ones where the total exposure of lenders is more than Rs 500 crore.

The 5:25 scheme at present allows banks to extend long-term loans of 20-25 years to match the cash flow of projects, while refinancing them every five or seven years.
Chandra said Rajan was also requested to reconsider external commercial borrowing (ECB) norms to allow foreign currency debt to infrastructure sector for medium term also.
Also, the Chairman was requested that lending can continue with NPAs besides converting debt into equity if the valuation of equity is done as per SEBI's guidelines.

NHAI Member Finance Satish Chandra, who also accompanied the Chairman in the meeting, said, "The meeting was quite fruitful and we are expecting some positive outcomes."

The meeting assumes significance as projects entailing investment of about Rs 30,000 crore are still stuck in the highways sector due to factors like equity crunch and regulatory hurdles.
The RBI governor was also asked to allow banks to provide
more funds for projects facing cost overruns due to delays.
About 14 highway projects worth Rs 30,000 crore are still stuck despite a series of meetings of bankers and developers.
The projects are stuck due to various issues such as land acquisition, forest and environment clearances, railway over-bridge problems, utility shifting, litigations, delayed decisions and financial problems.
When the Modi government took reins of the government, there were as many as 384 stuck highway projects on account of issues like land acquisition, delay in forest and environment clearances, litigations, equity crunch etc.

"Our efforts led to rolling out of majority of the 384 projects while we had to terminate 41 schemes. Of the remaining 21 languishing projects, issues have been solved for seven while we are confident to resolve issues with remaining 14 soon," Highways Minister Nitin Gadkari had said.
The stuck projects belong to players like Larsen & Toubro, HCC, Gammon, Madhucon, Soma and Essel Ifra, among others, while the list of lenders includes top names like SBI, Punjab National Bank and Bank of India.