Highway contractors demand infra loan provisions fixed at 2%

03 Jun 2024 CW Team

Additionally, the contractors have urged that the government consider 90% of the available land for financial closure rather than the 50% that was originally indicated and that the repayment moratorium be extended from the six months that the RBI had advised to a year.

The National Highways Builders Federation (NHBF) stated in its submission to the National Highways Authority of India, the finance ministry, and the Reserve Bank of India that increasing the provisioning from 0.4% to 5% would pose the greatest challenge to project viability. They explained that this increase in provisioning would lead to higher interest costs, subsequently raising the overall project expenses for both investors and the government.

Additionally, the federation mentioned that they believed implementing a 2% provisioning could be accomplished more swiftly by 2025?26, as opposed to waiting until 2026?27 for the phased implementation of 5% proposed by the RBI.

Regarding the availability of land for the financial closure of infrastructure projects, the NHBF suggested that a land availability of no less than 90% should be deemed sufficient. They emphasised that land availability presents the most significant risk factor, often causing delays or even project terminations.

Furthermore, advocating for an extension of the moratorium period to one year, the NHBF argued that this period is frequently utilised by borrowers to meet initial cash flow needs for stabilising operations. They cautioned that restrictions on this period could strain the company's cash flow and potentially stress the project, especially concerning build-operate-transfer projects.

Instead of the 5% that the Reserve Bank of India had proposed, highway construction contractors proposed fixing the provision that lenders must make against funding their projects at 2%. They said that this would negatively impact the viability of the projects. Lenders are currently required to reserve 0.4% of loans made for highway construction. The new draft rules on infrastructure funding by the banking regulator propose a significant rise in this. Additionally, the contractors have urged that the government consider 90% of the available land for financial closure rather than the 50% that was originally indicated and that the repayment moratorium be extended from the six months that the RBI had advised to a year. The National Highways Builders Federation (NHBF) stated in its submission to the National Highways Authority of India, the finance ministry, and the Reserve Bank of India that increasing the provisioning from 0.4% to 5% would pose the greatest challenge to project viability. They explained that this increase in provisioning would lead to higher interest costs, subsequently raising the overall project expenses for both investors and the government. Additionally, the federation mentioned that they believed implementing a 2% provisioning could be accomplished more swiftly by 2025?26, as opposed to waiting until 2026?27 for the phased implementation of 5% proposed by the RBI. Regarding the availability of land for the financial closure of infrastructure projects, the NHBF suggested that a land availability of no less than 90% should be deemed sufficient. They emphasised that land availability presents the most significant risk factor, often causing delays or even project terminations. Furthermore, advocating for an extension of the moratorium period to one year, the NHBF argued that this period is frequently utilised by borrowers to meet initial cash flow needs for stabilising operations. They cautioned that restrictions on this period could strain the company's cash flow and potentially stress the project, especially concerning build-operate-transfer projects.

Technology

28 Oct 2025

Building Faster, Smarter, and Greener!

Backed by ULCCS’s century-old legacy, U-Sphere combines technology, modular design and sustainable practices to deliver faster and more efficient projects. In an interaction with CW, Rohit Prabhakar, Director - Business Development, shares how the company’s integrated model of ‘Speed-Build’, ‘Smart-Build’ and ‘Sustain-Build’ is redefining construction efficiency, quality and environmental responsibility in India.U-Sphere positions itself at the intersection of speed, sustainability and smart design. How does this translate into measurable efficiency on the ground?At U..

Infrastructure Transport

28 Oct 2025

Smart Roads, Smarter India

India’s infrastructure boom is not only about laying more kilometres of highways – it’s about building them smarter, safer and more sustainably. From drones mapping fragile Himalayan slopes to 3D machine-controlled graders reducing human error, technology is steadily reshaping the way projects are planned and executed. Yet, the journey towards digitisation remains complex, demanding not just capital but also coordination, training and vision.Until recently, engineers largely depended on Survey of India toposheets and traditional survey methods like total stations or DGPS to prepare detai..

Real Estate

28 Oct 2025

What Does DCPR 2034 Mean?

The Maharashtra government has eased approval norms for high-rise buildings under DCPR 2034, enabling the municipal commissioner to sanction projects up to 180 m on large plots. This change is expected to streamline approvals, reduce procedural delays and accelerate redevelopment, drawing reactions from developers, planners and industry experts about its implications for Mumbai’s vertical growth.Under the revised DCPR 2034 rules, buildings on plots of 2,000 sq m or more can now be approved up to 180 m by the municipal commissioner, provided structural and geotechnical reports are certified b..