A senior banker who attended the meeting told dna, "We have asked the government to help banks change the ownership of companies without which additional financing will be difficult. The government has taken cognisance of the problem. Coal linkages and availability of gas are the other issues that have impacted many power projects."
Banks have asked the government to facilitate change in ownership in companies where promoters are wilfully defaulting.
However, this requires modification of regulations by the stock market regulator Sebi.
In a meeting with Hasmukh Adhia, secretary, department of financial services, and R N Choubey, special secretary, Ministry of Power, on Tuesday, top bankers suggested that further funding to stressed projects will be difficult unless the recovery processes and bankruptcy laws in the country are strengthened.
A senior banker who attended the meeting told dna, "We have asked the government to help banks change the ownership of companies without which additional financing will be difficult. The government has taken cognisance of the problem. Coal linkages and availability of gas are the other issues that have impacted many power projects."
Both the government representatives and the bankers were of the view that stalling of projects is severely affecting the balance sheets of the corporate sector and public sector banks, which in turn is constraining future private investment.
SS Mundra, deputy governor, Reserve Bank of India (RBI), who was present in the meeting, said, "We discussed various regulatory issues regarding these projects like overarching regulations."
Under discussion were 81 projects with a total bank credit of Rs 3.5 lakh crore from the road, ports, power and steel sectors, which were being hand-picked for a possible revival with additional funding by lenders, and the government providing coal linkages, subsidised gas supply and an amendment to the Electricity Act.
About 4% of the 81 projects discussed on Tuesday fall into the NPA (non-performing assets) category.
Another senior banker who attended the meeting said, "Projects selected for discussion were the ones with bank finance of up to Rs 3,000 crore in the power sector and the projects with bank finance of Rs 1,000 in other sectors." Chiefs of 13 public sector banks attended the meeting.
According to the economic survey, the stock of stalled projects at the end of December 2014 stood at Rs 8.8 lakh crore, or 7% of GDP.
Adhia said, "The main purpose of today's meeting was to understand the various reasons for stress in some of the infrastructure projects, what are the factors affecting the health of infrastructure projects and also to put in place, a coordinated mechanism for dealing with the stressed projects."
R N Chaubey, secretary, power ministry, said, "I can safely say that within the next couple of months the issue of coal supply not being there would have been substantially taken care of."
SBI chairman Arundhati Bhattacharya said, "We had a very fruitful discussion on how to deal with large projects and how specific problems in each sector can be addressed. This kind of discussions help the banks as it is an opportunity to appraise the government of the problems."
Choubey said that the government is setting up coal linkages of close to 65,000 megawatt, gas pooling and gas subsidy for the gas-based power plants are being undertaken so that projects can go on stream. He said as far as gas is concerned there is 24,000 mw of capacity which is either fully or partly stranded and that ministry has decided to import gas or LNG through GAIL.
TM Bhasin, chairman and managing director, Indian Bank and chairman of Indian Banks association (IBA), said, "We also discussed the Joint Lending Forum and apprised the secretary of the problem. The government is of the view that if 75% of the lenders by value of the loan and 65% of the lenders by number agree to the restructuring, then all lenders have to fall in line for the broad restructuring."
"The main purpose of today's meeting was to understand the various reasons for stress in some of the infrastructure projects, what are the factors affecting the health of infrastructure projects and also to put in place, a coordinated mechanism for dealing with the stressed projects
—Hasmukh Adhia, secretary, department of financial services
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