Banks in India are going to be given more functional and supervisory powers by the government with regard to road projects.
The Union government is set to make amendments to the model concession arrangement for road projects that will give powers to banks, says an official concerned. The move is aimed at speeding up execution of road development projects, which are often held up due to various factors including financing issues.
Tardy progress in improving road infrastructure is often cited as impediment to economic growth in Asia’s third largest economy. In the event of suspension of a concessionaire or the company that was awarded the project, banks will now be allowed to step into project agreements, the official from the Ministry of Road, Transport and Highways said.
The amendment would allow lenders to carry out internal scrutiny and advise the highways authority on selection of the new company for the project, the official revealed. At present, bankers have no say in the selection of a concessionaire, and this acts as a deterrent for banks that are approached for credit.
Bankers say the proposed change will help projects where the present developer is non-performing and banks fear that the account will turn into a bad loan.
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