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.

"Join industry leaders at RAHSTA Expo, India's premier platform for roads, highways and traffic infrastructure. Register now to explore innovations, network with experts and shape the future of mobility."

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 Transport

Third Railway Line Between Tatanagar And Adityapur Likely By September

The third railway line between Tatanagar and Adityapur is expected to be commissioned by September as work on the corridor advances, according to railway sources. The project to add a fourth line on the busy route is progressing and has been allocated Rs 50.89 billion (bn) in funding. The allocation underscores the focus on increasing capacity and easing congestion on the corridor. Relevant timetables are being adjusted to integrate the new capacity into regular operations. Construction activity has involved track laying, formation work and signalling upgrades along strategic stretches, with m..

Next Story
Infrastructure Transport

Indian Railways Approves Rs 2.7 bn Kavach Rollout in Odisha

Indian Railways has approved a Rs 2.7 billion (Rs 2.7 bn) plan to install the Kavach train collision avoidance system on 631 route kilometres in the East Coast Railway zone. The Ministry of Railways said the work will form part of a wider Kavach deployment programme that relies on an LTE based communication backbone rather than a standalone installation. The approval marks the latest stage in the steady expansion of the indigenous safety technology across the national network. The decision aims to enhance safety and reliability on corridors serving Odisha and adjoining areas. The project will ..

Next Story
Infrastructure Transport

Indian Railways Accelerates Modernisation Drive

Indian Railways utilised nearly 30 per cent of its capital expenditure budget for FY2026-27 within the first two months of the financial year, spending more than Rs 840 billion (bn) in April and May against a planned outlay of Rs 2.93 trillion (tn) for the year. The Union Budget allocated Rs 2.93 tn in total capex, comprising Rs 2.81 tn through gross budgetary support and Rs 120 bn from extra-budgetary resources. The early absorption indicates robust project execution and an aggressive infrastructure push. A significant share of the spending is being channelled towards track infrastructure, in..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement