With lenders experiencing stress on their infrastructure loan books, the head of country’s largest bank State Bank of India (SBI) has called for a need to introduce new products to finance the long-gestation projects, including refinancing the loans every five years.
“As we move forward, there is a greater need to device new products to fund infrastructure projects. This will be by means of new structures, such as 5×25 route (under which an asset gets refinanced every five years),” the newly-appointed chairperson Arundhati Bhattacharya told a capital markets summit here.
“Assets created for 35-40 years is being funded by 10-year money, which is all that commercial banks have. It is required to be paid back within an average span of seven years,” she said, adding that as a result of this, there is a “front-loading” of repayments.