Red Tape Choking Core Sector Disbursal: Bankers

Indian banks want the government to speed up the various clearances necessary for infrastructure projects as the tremendous delays in obtaining these permits have delayed loan disbursals, causing the gap between sanctions and disbursals to widen, banking sector officials said.

They said that it was due to the stagnating disbursals that banks were not resetting fresh advance targets for the infrastructure sector.

Banks have a few thousand crores sanctioned for infrastructure projects.

However, most of these remain undisbursed, they regretted.

Bank of Baroda (BOB) sanctioned Rs 1,000 as term loans, mainly to projects in the infrastructure sector, and Rs 1,500 crore as guarantees.

 

However, the disbursals were marginal, a top official said.

Bank of Baroda commissioned approximately Rs 800 crore to projects in Madhya Pradesh, Rajasthan and Tamil Nadu, of which some are in the process of commissioning, officials said.

In case of financial institutions too, the gap between sanctions and disbursals has been widening. Among the institutions, ICICI's latest figures for the first quarter of the current fiscal showed disbursals to the infrastructure sector at 21 per cent, while approvals stood at 33 per cent.

In comparison, its structured assistance to the corporate sector saw approvals at 30 per cent and disbursals at 35 per cent. Its regular project finance assistance to the traditional manufacturing sector amounted to 30 pect of approvals and 33 per cent of disbursals.

IDBI's total sanctions to infrastructure comprised 33 percent of total sanctions while disbursals were only 16.05 percent of total disbursals.

Bank official said project promoters were experiencing delays in obtaining power purchase agreements, fuel supply agreements, and clearances relating to environment control norms.

"We have got surplus funds, which we are prepared to lend, but the disbursals are not taking place, Therefore, we are not resetting fresh targets for sanctioning," a top banker said.

He added that the banks had recently taken up the issues with the concerned ministries under various forums.

Analysts said the problem arose as each individual project required different clearances from several ministries, including the finance ministry, the industry ministry, the petroleum ministry, the environmental ministry and several others.

The lack of coordination between these ministries was causing serious time-over-runs, they explained.