Pvt banks come forward to fund highway projects

NEW DELHI: Private banks like HDFC, Kotak Mahindra, IndusInd, Yes Bank and RBL have shown interest to fund more national highway projects under public-private partnership (PPP) mode. This comes at a time when some of the public sector banks, reeling under massive NPAs, are hesitant to finance more works.

Sources said executives of top private banks told highways minister Nitin Gadkari last week that they are ready to finance the projects executed under the hybrid annuity model (HAM) where government takes the maximum risk and financiers are largely insulated. Officials said private banks have concurred to fund at least 20 of 56 projects, which were awarded during the last quarter of 2017-18.

Highways secretary and NHAI chairman Y S Malik told TOI that they are working on options including reaching out to foreign pension funds to buy long-term NHAI bonds with assured returns.

So far, HDFC, RBL and IndusInd Bank have financed a few HAM projects in the highway sector and now this basket of lenders is increasing. Earlier, only ICICI and Axis banks used to provide limited financing to highway developers.

It is learnt that even State Bank of India (SBI) has shown interest to finance more highway projects on its own rather than by forming any consortium which has largely been the practice so far. “SBI chairman Rajnish Kumar said arriving at consensus among banks in a consortium becomes more problematic,” said an NHAI official, who was present at Gadkari’s meeting with bankers in Mumbai.

Malik said, “SBI has also offered NHAI Rs 25,000 crore loan for 10 years at only 7.99% interest. We had recently invited expression of interest from banks to provide us long term loan for Rs 35,000 crore.”

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