NHAI urges RBI to relax lending norms for road projects

Seeking priority sector lending for highways sector given its multiplier effect on economy, National Highway Authority of India (NHAI) Chairman Raghav Chandra in its meeting with RBI Governor Raghuram Rajan has urged to relax lending norms for road developers. Chandra has said that they want RBI’s intervention into the trouble points in road sector lending including inclusion of projects lesser than Rs 500 crore in its 5:25 scheme. According to the RBI's priority sector norms, banks have to necessarily provide 40 per cent of their total lending to the sectors so classified.

At present the 5:25 scheme allows banks to extend long-term loans of 20-25 years to match the cash flow of projects, while refinancing them every five or seven years. RBI has extended its flexible refinancing and repayment option for long-term infrastructure projects to existing ones where the total exposure of lenders is more than Rs 500 crore.

Besides, Chandra has also requested to reconsider external commercial borrowing (ECB) norms to allow foreign currency debt to infrastructure sector for medium term also. Moreover, he requested that lending can continue with NPAs besides converting debt into equity if the valuation of equity is done as per SEBI's guidelines.