Road ministry may raise with FinMin RBI's new norms on infra project financing

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Reserve Bank of India and finance ministry, as the stiff provisioning norms can potentially dry up bank finance for infrastructure projects and make loans costlier. The immediate concern for the sector is whether the changes would derail MoRTH’s plan to revive BoT (build operate transfer) projects for highways, where private investment is expected to come after a long interval.

Already, MoRTH has identified 53 BoT (toll) projects for a length of 5,200 km worth ₹2.1 trillion for award in coming year, and bids for 7 projects with a length of 387 km worth ₹27,000 crore have been invited. According to one of the two persons quoted above, MoRTH is getting suggestions from the industry that would help it present a case for the sector and seek changes in the draft regulations before the end of the consultative process on the draft by 15 June.

“Not only banks, but the views of the sector that would be most impacted by RBI's revised guidelines would have to be heard before finalising any changes in provisioning norms," the person said. Query sent to the ministry of road transport and highways remained unanswered till press time.

“The RBI draft regulations would be a big negative for the roads and highways sector and could dry up investments in the absence of requisite funding from financial institutions. We plan to put our request for a review or withdrawal of the changed norms of classification of assets in the infrastructure sector requiring higher provisioning during construction stage with the MoRTH so that the concerns get heard and addressed during the consultative process for finalising the draft regulations.