If the National Highways Authority of India (NHAI) made available at least 80 per cent of the land required for public-private partnership (PPP) road projects, banks can now start lending. Till now, banks had been insisting that the developers take complete control of the land before getting funds. The Department of Financial Services has conveyed this to bank chief executive officers, after a decision was taken by the Committee of Secretaries.
The move is likely to ease funding for highway developers, especially on PPP projects. In highway development projects, the NHAI acquires the land and makes them available to developers. The NHAI had backed the proposal to allow fund disbursal once 80 per cent land was available, saying that bankers should draw comfort from the fact that developers were being allowed to collect toll after 75 per cent project completion.
IIFCL, which lends to highway projects, also decided recently to start disbursing loans for road projects after 80 per cent of required land is available. The move should ease fund flow to around 30 highway projects that were awarded in 2011-12 and 2010-11, but which have not tied up funds.
——-National Highways Authority of India, banks, IIFCL
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