The parliamentary standing committee for transport has observed that it is rather "strange" that loans disbursed by banks for some highway projects exceed the estimated project cost and expressed concern over a large chunk of the Rs 75,000 crore worth of loans extended to the road sector turning bad.
In particular, the committee has raised questions about huge loans advanced to Jaypee Infratech turning into non-performing assets (NPAs).
For IDBI, the NPA percentage is as high as 52 per cent of loans disbursed for the road sector. The committee wants to know the reason why this huge amount has become NPA, that too to a single concessionaire, Jaypee Infratech Ltd, the panel chaired by Kanwar Deep Singh said in its latest report.
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Seeking full details of the project awarded to Jaypee, the 33-member standing committee further observed that State Bank of India has lent Rs 19,502 crore out of which Rs 1,986 crore has slipped into NPAs.
The committee observed that it was rather strange that a concessionaire who has got a project for Rs 1,000 crore gets Rs 1,400 crore for the same project. Projecting that total NPAs of Rs 2.6 lakh crore may go up to Rs 4 lakh crore because of defaults, the committee recommended that banks be empowered more to make recovery of bad debt.
The committee urged the government to consider empowering banks adequately to make recovery of bad debt easier. For example, in the case of a default, the banks may be allowed to take over the entire company. It also took on board SBI's contention that all approvals from statutory authorities and clearances from government agencies should be obtained before a particular project is sent for bidding. Another area of discord is the project cost estimated by NHAI and the concessionaires, which results in lending delay by financial institutions.
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