A finance ministry appointed committed under IIFCL chairman Santosh B Nayar, constituted to recommend measures to revive investments stuck power projects in which investment to the tune of Rs 6.2 lakh crore is stranded, has proposed allowing banks and lenders a one-time dispensation to provide easier refinancing norms for all viable projects, irrespective of their loan size.
This means that banks would be able to give these projects more time for repayment, increase tenure of loans and categorise these power projects as standard asset rather than as non-performing assets.
State Bank of India chairperson Arundhati Bhattacharya told HT that the bank would “consider the Nayar committee report”.The report, a copy of which is with HT and was submitted to the finance ministry last week, recommends a one-time shift of all stressed but competitively bid projects to a regulated tariff regime that may even enable banks to consider sharing a part of the burden by partially converting their debt into equity. Similarly, developers or promoters may be provided a lesser Return on Equity (RoE).
“This way all the stakeholders including the power producers, the lenders and the Government would take a portion of the sacrifice required to save these (projects) ,” the report said.
The committee has also proposed setting up of a separate government entity to assess project viability and prepare a detailed project report to ensure funding for key projects is not choked.
It said the government should also look at developing the corporate bond market for promoting infrastructure projects, and that the finance ministry should offer tax benefits as well for attracting retail participation.
The committee has also proposed participation of institutions such as PFC, REC, LIC, HUDCO and IREDA in cost overrun funding.
Finance minister Arun Jaitely has asked his officials to look at issues affecting projects and come up with a solution, which would provide the much-needed boost to economic growth.
Last week Jaitley, financial services secretary Hasmukh Adhia, the power secretary and public sector bank chiefs held a meeting on the issue.
“The message that was given to bankers was that they need not be over cautious while lending, which has also become the case as their level of NPA has risen, besides, a lot of direction is expected from the Nayar committee report,” a bank chairman said. The Indian Banks’ Association is also looking into the issue.