We expect better prospects for roads and power sector, provided proper support is available from government by way of single window clearances, says M Narendra, CMD, Indian Overseas Bank, in an interview with Sumantra Das.
What has been your experience lending to infrastructure sectors? Which sectors have performed well from a bank’s perspective? What is the current exposure of your bank to power and road sectors?
Our experience with regard to infrastructure lending has been by and large satisfactory. Our bank has extended substantial lending to both road and power sectors. Our exposure to telecommunications, aviation, port and other sectors is limited. Road projects have performed well in the past though of late some projects are finding it difficult to achieve Commencement of Operation Date (COD).
What are your plans for lending to infrastructure next fiscal? Will there be any change from the past years? Which are the infra verticals do you see more prospects in coming years.
We are going slowly on thermal power and road sectors which are having a major share in our existing exposures. We are also conscious of cap fixed by our Board on infrastructure sectors. Among various verticals, we expect better prospects for roads and power sector, provided proper support is available from government by way of single window clearances.
It is reported that power sector will grow at 15-16 per cent per annum during 2013-15. However, as already stated, we have exposure caps to be adhered to.
Are we lacking somewhere on long term vision on infrastructure investment? What has been your experience?
Our critical analysis of earlier decisions on various projects and their present positions reveals that there were some lacunae in our long term vision.
For example, in the case of coal-based power projects, fuel supply agreements were expected to be smooth affair at the time of sanction. But in reality there has been enormous delay in signing of fuel supply agreements for power projects. However, we understand that these issues are being addressed by the government and banks may again take greater interest in infra financing.
How far global economic scenario affected Indian infrastructure sector?
The effect of global economic scenario has had its impact on the Indian infrastructure sector. Foreign investment in power, port and telecom has come down drastically on account of which investment in new projects have come down.
How will you describe Corporate Debt Restructuring (CDR), it seems as norm for most of the infra companies in India?
Infrastructure projects have long gestation period. In spite of that, we observe delay in completion of the projects due to factors beyond the control of the promoters. This mainly necessitates them to approach CDR for restructuring of their loans. There may be cases which have gone to CDR for reasons of fault on the part of promoters. But as far as infrastructure is concerned, it is observed that restructuring is necessitated due to factors beyond the control of the promoters.
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