With reference to Abhijit Lele's report, "RBI, banks mull firm for project monitoring" (October 12), the move by the Reserve Bank of India and banks is quite welcome.
In India, when joint lending is undertaken by a group of banks and foreign investors, the lead lender assumes the role of evaluating, vetting and monitoring agency. Other lenders do not generally involve themselves in project monitoring; the entire internal reviews of the exposure undertaken from time to time depend wholly on the reports submitted by the lead lender. The lead lender also depends on a lenders-independent engineer (LIE) for periodic updates on the status of implementation.
Most LIEs do not provide a chart prepared with the support of project evaluation and review technique software. If at all it is provided, bankers tend to fail to read or understand it fully. I have come across periodic reports of an LIE, comprising more than 100 pages every quarter, but which contained only one sentence in it on the actual progress. This went unnoticed by several lenders. Therefore, a separate entity to evaluate, vet and monitor large-scale projects is the need of the hour.
However, while the new entity is entrusted with the task of evaluating, vetting and project monitoring, issues related to responsibility, accountability and ownership need to be carefully handled. Otherwise, side-tracked projects will become orphans with nobody to claim their parentage.
P D Sankaranarayanan, Thiruvananthapuram
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