Infra lending faces high risk: RBI
Business new tamfitronics MUMBAI: RBI deputy governor M Rajeshwar Rao has said that infrastructure projects face high risks, complicating their financing. He called for a unified approach to infrastructure development, where projects are viewed as part of a larger, connected system rather than as separate efforts.The governor's statement comes at a time when RBI has proposed new norms requiring banks to set aside an additional provision of 5% of the loan amount, compared to the current requirement of 0.4%.The new rule, if implemented, would make project financing much more expensive. The deputy governor was speaking at an infrastructure seminar organised by the National Bank for Financing Infrastructure and Development (NaBFID)."High sunk costs, coupled with long gestation periods, further complicate the financing of infrastructure projects and lead to asset-liability mismatches. Delays in approvals,...