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Informist, Thursday, Sept. 11, 2025

 

NEW DELHI – Government, top banks and large non-bank financing companies have formed a working group to oversee infrastructure financing and credit enhancement to the sector, people aware of the development said Thursday. This panel has representation from Department of Financial Services, State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, ICICI Bank, HDFC Bank, National Bank for Agriculture and Rural Development, Power Finance Corp. of India, REC Ltd., Indian Renewable Energy Development Agency Ltd., India Infrastructure Finance Co. Ltd., and the National Bank for Financing Infrastructure and Development, sources said. 

 

"The working group is a result of top orders from the government to enhance credit to infrastructure sector in order to boost the economy," one of the people who attended the introductory meeting of the panel here on Thursday said, adding that stock taking meetings will happen in the future, but no timeline of the next meeting has been fixed as of now. "It was more of an internal meeting today to understand the basic nuances of infrastructure credit," the person added.

 

Department of Financial Services Secretary M. Nagaraju chaired Thursday's meeting and was attended by top executives of the above top lenders, including Punjab National Bank Managing Director and Chief Executive Officer Ashok Chandra, Canara Bank Managing Director and Chief Executive Officer Satyanarayana Raju, Power Finance Corp. of India Chairman and Managing Director Parminder Chopra and National Bank for Financing Infrastructure and Development Managing Director and Chief Executive Officer Rajkiran Rai.

 

In the first meeting, the panel discussed multiple issues of the infrastructure sector, including the need to finance the untapped areas of infrastructure, another person who attended the meeting said. The panel is tasked to identify the issues and risks of infrastructure credit and come up with solutions to improve lending to the sector, the person added. 

 

Another person who attended the meeting said that specific issues like the Reserve Bank of India's project financing norms were not dissected at stretch but were briefly touched upon to discuss what are the changes in the infrastructure credit space that the industry is staring at. 

 

The meeting was held weeks before the RBI's project financing norms come into effect. According to the central bank's directions, which will come into effect from Oct. 1, lenders will have to maintain a standard asset provisioning requirement of 1% during the construction phase of all projects, including residential projects, with a general provision of 1.25% during the construction phase of only commercial real estate projects.

 

Currently, banks keep a provision of 0.4% on the outstanding exposures during construction. For projects that are currently under way, the standard provisioning requirement will remain 0.4%.

 

Finance Minister Nirmala Sitharaman had last week called upon banks to participate in India's growth story by further expanding credit to infrastructure projects. Scheduled commercial banks have recorded a "massive improvement in their asset quality" which will help provide cheaper and steadier credit to households, micro, small, and medium enterprises, and infrastructure projects, she had said at an event in Chennai. "It will also lead to lower systemic risks and sustained confidence in India's financial system," she had said.

 

The Prime Minister Narendra Modi government has been pushing for higher infrastructure spending through robust capital expenditure and has repeatedly urged the private sector to take the baton forward. The government has set a capital expenditure target of INR 11.21 trillion for 2025-26 (Apr-Mar) while the revised Budget target for FY25 was INR 10.18 trillion.   End

 

Reported by Priyasmita Dutta

Edited by Deepshikha Bhardwaj

 

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