Will The New Rbi Norms Boost Core-Sector Financing?

Bankability is the issue

K Kannan

Former chairman, Bank of Baroda

The Reserve Bank of India (RBI) norms on infrastructure financing, unveiled last week, have addressed only partially the problem, which are being faced by the long-term infrastructure projects. In fact, finance is not the main constrain for the core sector projects.

Earlier, the RBI used to have meetings with senior bankers and institution heads over the financing of projects. The impression was that the banks were not willing to finance core projects. However, the crux of the problem lies in the inability to get proper escrow accounts and in the failure of the government to clear proposals fast enough.

 

Then, there were issues of tariffs in case of power and telecom projects and recovery in road projects. All of which continue to make many projects unbankable. Importance has been felt for a long time for the need to finance infrastructure in the country