IIFCL in spotlight for lending deficiencies in road projects
ECONOMY & POLICY

IIFCL in spotlight for lending deficiencies in road projects

Government-owned long term financing company India Infrastructure Finance Company Ltd (IIFCL) has come under criticism of the Comptroller and Auditor General of India (CAG) for its deficiencies in lending to road projects.

Several deficiencies, including not giving due attention to the major risk of Right of Way availability to projects, led to a loan of Rs 1,895.50 crore to nine out of 32 projects examined in audit, becoming a non-performing asset (NPA), said the CAG report.

Seven out of nine NPA cases showed unavailability of the required Right-of-Way as the primary reason for non-completion of projects and turning the loans into NPAs.

The CAG report said in one NPA case, unrealistic traffic projection affected the project’s commercial viability.


Make in Steel 2021

24 February 

Click for event info


4th Indian Cement Review Conference 2021

17-18 March 

Click for event info


In many cases, the loans were disbursed without ensuring compliance with Common Loan Agreement (CLA) conditions relating to environment, forest and tree cutting clearances, infusion of required equity through an escrow account and funding of cost overrun or IDC by promoters. This led to a risk of misuse of funds by promoters, delay in work progress, and an additional avoidable loan to badly managed projects.

The CAG has also said that IIFCL sanctioned and disbursed two loans under Takeout Finance Scheme without ensuring compliance with the critical requirement of obtaining ‘No Objection Certificate’ (NOC) from concessioning authorities, and without ensuring required debt servicing capacity of the borrowers. Resultantly, IIFCL ended up lending Rs 26.20 crore to already terminated projects.

Image: The CAG said IIFCL disbursed loans without complying with CLA.


Also read: Government seeks to restructure IIFCL

Also read: Lapses in highway building quality will cost heavily

Government-owned long term financing company India Infrastructure Finance Company Ltd (IIFCL) has come under criticism of the Comptroller and Auditor General of India (CAG) for its deficiencies in lending to road projects. Several deficiencies, including not giving due attention to the major risk of Right of Way availability to projects, led to a loan of Rs 1,895.50 crore to nine out of 32 projects examined in audit, becoming a non-performing asset (NPA), said the CAG report.Seven out of nine NPA cases showed unavailability of the required Right-of-Way as the primary reason for non-completion of projects and turning the loans into NPAs. The CAG report said in one NPA case, unrealistic traffic projection affected the project’s commercial viability.Make in Steel 202124 February Click for event info4th Indian Cement Review Conference 202117-18 March Click for event info In many cases, the loans were disbursed without ensuring compliance with Common Loan Agreement (CLA) conditions relating to environment, forest and tree cutting clearances, infusion of required equity through an escrow account and funding of cost overrun or IDC by promoters. This led to a risk of misuse of funds by promoters, delay in work progress, and an additional avoidable loan to badly managed projects. The CAG has also said that IIFCL sanctioned and disbursed two loans under Takeout Finance Scheme without ensuring compliance with the critical requirement of obtaining ‘No Objection Certificate’ (NOC) from concessioning authorities, and without ensuring required debt servicing capacity of the borrowers. Resultantly, IIFCL ended up lending Rs 26.20 crore to already terminated projects.Image: The CAG said IIFCL disbursed loans without complying with CLA. Also read: Government seeks to restructure IIFCL Also read: Lapses in highway building quality will cost heavily

Related Stories

Gold Stories

Next Story
Infrastructure Urban

KONE Opens India's First Digital Experience Centre in Pune

KONE, a global elevator and escalator manufacturer, has inaugurated its first Digital Experience Centre (DEC) in India, located in Pune. The facility aims to showcase how artificial intelligence (AI), connectivity and data-driven technologies can enhance customer experiences and improve building operations.The centre was inaugurated by Jussi Herlin, Executive Vice Chair, KONE Corporation; Philippe Delorme, President and CEO, KONE; and Nandan Nilekani, Co-founder and Chairman of the Board, Infosys.Designed as an interactive customer environment, the facility demonstrates digital solutions cover..

Next Story
Infrastructure Urban

CII GreenCo Launches Circularity Guidelines for Indian Industry

The Confederation of Indian Industry (CII) GreenCo Council has launched the CII GreenCo Circularity Guidelines – Pilot Version at the 17th CII GreenCo Waste & Resource Management Summit 2026 in Chennai. The initiative aims to strengthen resource efficiency, waste reduction and circular economy practices across Indian manufacturing and process industries.The guidelines introduce a structured framework with circularity indices covering raw materials, consumables, packaging and other resource inputs. These indicators will help industries assess existing practices, identify opportunities to ..

Next Story
Infrastructure Energy

Global Electronics Association Launches IPC-1783-CO2E Standard

The Global Electronics Association has introduced IPC-1783-CO2E, a new international standard aimed at improving consistency, transparency and comparability in product carbon footprint reporting across the electronics manufacturing industry.The standard, titled International Standard for Data Collection and Reporting of CO2 Equivalent (CO2e) Emissions for the Electronics Manufacturing Supply Chain, provides industry-specific guidance for collecting, estimating and reporting carbon emissions data.With increasing regulatory requirements and customer expectations, electronics manufacturers face c..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code