+
Road Ministry to oppose a rise in project lending rates
ROADS & HIGHWAYS

Road Ministry to oppose a rise in project lending rates

According to a senior official, the Ministry of Road Transport and Highways intends to maintain current project financing lending rates while soliciting feedback from all relevant parties about the possible consequences of draft guidelines put forth by the Reserve Bank of India (RBI). The ministry will push the central bank to make sure that the nation's infrastructure development does not suffer in terms of cost or speed, and it will oppose any modifications to the rules that would result in higher loan rates. In its capacity as a regulator, the RBI will need to strike that balance to prevent the financial sustainability of road projects from suffering. Earlier this month, the central bank recommended stricter guidelines, mandating that lenders set aside 5% of the project loan amount as general provisions throughout the building phase?an increase from the current 0.4% provisions. To confirm the ministry's perspective on the draft plan, the National Highways Authority of India (NHAI), which is a part of the road ministry, met with members from the National Highway Builders Federation (NHBF) for the first time. More discussions are anticipated in the next few days. According to those with knowledge of the discussions, highway builders believe that the RBI's proposed 5% provision will result in a major increase in the financial burden on organisations responsible for carrying out highway infrastructure projects. This would make it more difficult for finance to reach worthy organisations and people, which would eventually impede economic growth and the development of vital infrastructure projects.

According to the NHBF, agencies may face difficulties because of the strict deadlines for meeting provisioning requirements and funding cost overruns resulting from extensions of the date of commencement of commercial operations (DCCO). This is especially true for infrastructure projects with different timelines and levels of complexity.

In order to give agencies more time to get used to the new provisions and prevent unforeseen financial difficulties, it has proposed a phased approach to the provisioning needs. In order to assist highway builders in streamlining the reporting process without placing undue administrative costs on them, NHBF has also encouraged the central bank to reconsider the terms and circumstances for supporting cost overruns and has requested more clarity in the disclosure requirements.

According to a senior official, the Ministry of Road Transport and Highways intends to maintain current project financing lending rates while soliciting feedback from all relevant parties about the possible consequences of draft guidelines put forth by the Reserve Bank of India (RBI). The ministry will push the central bank to make sure that the nation's infrastructure development does not suffer in terms of cost or speed, and it will oppose any modifications to the rules that would result in higher loan rates. In its capacity as a regulator, the RBI will need to strike that balance to prevent the financial sustainability of road projects from suffering. Earlier this month, the central bank recommended stricter guidelines, mandating that lenders set aside 5% of the project loan amount as general provisions throughout the building phase?an increase from the current 0.4% provisions. To confirm the ministry's perspective on the draft plan, the National Highways Authority of India (NHAI), which is a part of the road ministry, met with members from the National Highway Builders Federation (NHBF) for the first time. More discussions are anticipated in the next few days. According to those with knowledge of the discussions, highway builders believe that the RBI's proposed 5% provision will result in a major increase in the financial burden on organisations responsible for carrying out highway infrastructure projects. This would make it more difficult for finance to reach worthy organisations and people, which would eventually impede economic growth and the development of vital infrastructure projects. According to the NHBF, agencies may face difficulties because of the strict deadlines for meeting provisioning requirements and funding cost overruns resulting from extensions of the date of commencement of commercial operations (DCCO). This is especially true for infrastructure projects with different timelines and levels of complexity. In order to give agencies more time to get used to the new provisions and prevent unforeseen financial difficulties, it has proposed a phased approach to the provisioning needs. In order to assist highway builders in streamlining the reporting process without placing undue administrative costs on them, NHBF has also encouraged the central bank to reconsider the terms and circumstances for supporting cost overruns and has requested more clarity in the disclosure requirements.

Next Story
Infrastructure Urban

Naidu Seeks Rs 563 Crore For AP Sports Infrastructure

Andhra Pradesh Chief Minister N Chandrababu Naidu has sought Rs 563 crore from the Centre to boost sports infrastructure in the state, including Rs 538 crore for stadium development and Rs 25 crore to host the Khelo India Martial Arts Games 2025. Naidu made the request during a meeting with Union Youth Services and Sports Minister Mansukh Mandaviya in New Delhi on Wednesday.The CM urged early completion of Khelo India infrastructure projects in Tirupati, Rajahmundry, Kakinada, and Narasaraopeta, and called for an international-standard badminton training centre and a national aquatic sports hu..

Next Story
Infrastructure Transport

Tough Bidding Norms Slow NHAI Road Project Awards

Stringent bidding rules imposed by the Ministry of Road Transport & Highways (MoRTH) have led to a slowdown in project awards by the National Highways Authority of India (NHAI), despite a robust Rs 3.5 trillion pipeline. According to an HDFC Securities report, the shift to more cautious developer models now favours firms with strong balance sheets, as tighter qualification norms limit aggressive bidders.The revised norms mandate additional performance security, targeting the exclusion of players that previously submitted low bids—often 25 to 40 per cent below NHAI cost estimates—raisin..

Next Story
Infrastructure Transport

Mumbai Gets Coastal Nod for Next Promenade Phase

As Mumbai prepares to open two major sections of its expansive seafront promenade this week, the city’s civic authority has secured a key coastal clearance to advance further construction. The Maharashtra Coastal Zone Management Authority (MCZMA) has approved the commencement of work on the segment between Haji Ali and Baroda Palace, with tendering expected soon after project cost assessments.The promenade, stretching 7.5 km in length and 20 metres wide, is being designed as a flagship open space for walkers, joggers, and cyclists. Two critical stretches—2.75 km from Tata Garden to Haji Al..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?