FinMin to meet PSU banks to review stalled projects

Concerned over rising bad loans in infrastructure sector, the Finance Ministry has called a meeting of heads of public sector banks tomorrow to chalk out a roadmap for clearing bottlenecks that hamper implementation of large projects.

Case by case review of some of the major infrastructure projects would be undertaken by the ministry in presence of senior officers of the ministries of power, steel, transport, shipping and the RBI, an official statement said.

The Department of Financial Services Secretary Hasmukh Adhia had said recently that "we will be doing segment wise analysis of stalled projects to understand what are the impediments and what kind of policy support is required to facilitate implementation of these large projects.

"Large sized stalled projects of infrastructure sector, including power, surface transport, steel, shipping, would come up for review in the meeting at Mumbai".

The meeting would help the department crystalise actions required by banks, the Finance Ministry and other central ministries as well as support required from the Reserve Bank, he had said.

One of the major reasons for rising non-performing assets (NPAs) for PSU banks is non-implementation of infrastructure projects for reasons like, fuel linkage, environment clearance and land acquisition issue.

The level of NPAs and the stressed projects of the public sector banks have been showing an upward trend in the last four quarters.

As per RBI data, Gross NPAs of the PSU banks have gone up to Rs 2,60,531 crore (Rs 2,605.31 billion) as on December, 2014.

Gross NPAs of public sector banks rose sharply to 5.33 per cent in September 2014 as compared to 4.72 per cent of total advances at the end of March 2014.

As per an estimate, the impact of cancellation of coal block allotments on PSU banks because of production stoppage at theraml power plants is Rs 96,484 crore (Rs 964.84 billion).

About 300 stalled projects a involving staggering investment of Rs 18.13 lakh crore are pending for resolution. Some of the important infrastructure projects under the category include, Hinduja National Power Corporation entailing investment of Rs 5,545 crore or Rs 55.45 billion), Lanco Amarkantak Power Ltd (Rs 7,700 crore or Rs 77 billion)), Prayagraj Power Generation Company (Rs 10,780 crore or Rs 107.80 billion)), Jindal India Thermal Power (Rs 9,121 crore or Rs 91.21 billion), and Lanco Anpara Power Ltd (Rs 6,000 crore).

Some of the stalled projects in the shipping and port sector are Dighi Port (Rs 1,432 crore) and Bharti Shipyard (Rs 5,000 crore). In the steel sector, a project of Essar Steel entailing investment of Rs 22,587 crore is awaiting clearance. Besides, projects of Bhushan Steel - worth Rs 30,000 crore, VISA Steel - Rs 6,000 crore, and Jindal Stainless Ltd Rs 8,986 crore have also been stalled.