In a follow up of Prime Minister Manmohan Singh’s initiative to accelerate R1-lakh-crore investment in infrastructure, finance minister P Chidambaram has asked banks to evolve a mechanism to ensure credit flow to ongoing projects.
Although Chidambaram remained tight lipped after a seven hour long meeting with bankers on funding stalled infrastructure projects in eastern India, SBI chairman Pratip Chaudhuri said the meeting mainly focused on identifying reasons for project being stalled and the hazards faced by banks to ensure credit flow to such projects.
There are around 10-12 stalled projects in Eastern India with costs estimated at R31,000 crore. Bank loan for these projects are worth R23,000 crore but most projects are stalled for non banking reasons.
“Land and fuel supply makes 90% of the contentious issues. Banks did not contribute much for stalling projects in the region,” Chaudhuri said.
He said problems in financing comes when a project having a consortium of say 15 bankers as lenders do not fall in the same line about funding.