Highway builders seek 2% reduction in infra loan provision

04 Jun 2024 CW Team

They noted that currently, lenders must set aside 0.4% as provision against loans given to highway builders. The banking regulator had proposed a significant increase in this provision in its recent draft guidelines on infrastructure financing.

The contractors also proposed that the government should consider 90% of land availability for financial closure, rather than the proposed 50%, and extend the moratorium for repayment to a year from the RBI's suggested six months.

The National Highways Builders Federation (NHBF) stated in its submission to the National Highways Authority of India, the finance ministry, and the Reserve Bank of India, "Increasing the provisioning from 0.4% to 5% will be the biggest impediment to project viability. It will raise interest costs, thereby increasing the project cost for both investors and the government."

According to the NHBF, this increased provisioning would slow down infrastructure development, hamper economic growth, and affect monetization benefits.

The federation also suggested that a 2% provisioning rate could be implemented faster by 2025-26, compared to the government's plan to implement 5% by 2026-27 in a phased manner. "Phasing may not benefit the infrastructure industry as lenders may consider the highest provisioning rate in calculating lending rates," they explained.

Regarding land availability for financial closure of infrastructure projects, the NHBF recommended that not less than 90% of land availability should be considered sufficient. "Land availability is the primary risk factor causing delays or sometimes project termination," they emphasized.

Advocating for an extension of the moratorium period to a year, the NHBF argued that this period is often necessary for lenders to support initial cash flow requirements for stabilising operations.

The highway construction contractors suggested that the provision required by lenders for financing their projects should be fixed at 2% instead of the Reserve Bank of India's proposal of 5%. They argued that the RBI's proposal would harm project viability. They noted that currently, lenders must set aside 0.4% as provision against loans given to highway builders. The banking regulator had proposed a significant increase in this provision in its recent draft guidelines on infrastructure financing. The contractors also proposed that the government should consider 90% of land availability for financial closure, rather than the proposed 50%, and extend the moratorium for repayment to a year from the RBI's suggested six months. The National Highways Builders Federation (NHBF) stated in its submission to the National Highways Authority of India, the finance ministry, and the Reserve Bank of India, Increasing the provisioning from 0.4% to 5% will be the biggest impediment to project viability. It will raise interest costs, thereby increasing the project cost for both investors and the government. According to the NHBF, this increased provisioning would slow down infrastructure development, hamper economic growth, and affect monetization benefits. The federation also suggested that a 2% provisioning rate could be implemented faster by 2025-26, compared to the government's plan to implement 5% by 2026-27 in a phased manner. Phasing may not benefit the infrastructure industry as lenders may consider the highest provisioning rate in calculating lending rates, they explained. Regarding land availability for financial closure of infrastructure projects, the NHBF recommended that not less than 90% of land availability should be considered sufficient. Land availability is the primary risk factor causing delays or sometimes project termination, they emphasized. Advocating for an extension of the moratorium period to a year, the NHBF argued that this period is often necessary for lenders to support initial cash flow requirements for stabilising operations.

Real Estate

05 Dec 2025

RBI Rate Cut Boosts Confidence Across Housing Market

Industry Context and Market DynamicsThe real estate industry has welcomed the RBI’s rate cut as a timely boost to affordability and demand. With home prices having risen steadily across major markets, even a marginal reduction in interest rates meaningfully strengthens purchasing power, especially for first-time and mid-income buyers.Ashish Jerath, President – Sales & Marketing, Smartworld Developers, observes:“The RBI’s 25-basis-point cut, bringing the repo rate down to 5.25%, is a timely boost for the real estate sector. Lower interest rates reduce borrowing costs, enabling homeb..

Infrastructure Transport

05 Dec 2025

BMC Resumes Rs 170 Billion Road Works, Targets 80 per cent By Jan 2026

Following the withdrawal of the southwest monsoon in October, the Brihanmumbai Municipal Corporation (BMC) has restarted work on 645 roads—covering 297.49 kilometres—under its large-scale concretisation programme. Data shows that more than 60 per cent of the resumed works are located in the western suburbs. Officials said the civic body aims to complete concretisation on 80 per cent of the roads where fresh work has begun by January 2026. Launched in 2022, the Rs 170 billion project seeks to concretise 700 kilometres of roads across Mumbai. All civil works were halted during the monsoon ..

Infrastructure Urban

05 Dec 2025

India Pushes Digital Shift In Urban Land Mapping

The Department of Land Resources (DoLR) under the Ministry of Rural Development has convened a National Symposium on NAKSHA – the National Geospatial Knowledge-based Land Survey of Urban Habitations – to advance India’s transition to modern, technology-driven land mapping. Speaking at the inaugural session, Secretary Manoj Joshi underscored the urgent need to move revenue departments away from outdated, tape-based methods and rough hand-drawn sketches. He stressed that adopting latitude–longitude-based digital mapping and GIS-linked registration systems is essential for economic stabi..