(a) whether the ASSOCHAM has suggested a single window approach by banks and
financial institutions for financing infrastructure and green fields and service package
as reported in the Hindu, dated January 27, 2003;
(b) if so, the measures suggested by trie ASSOCHAM in this regard; and
(c) the reaction of the Government/Banks and Financial Institutions thereto?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE AND COMPANY AFFAIRS
(SHRI ANANDRAO V1THOBA ADSUL):
(a) and (b) Yes, Sir. As per the news-item published in The Hindu` dated 27.1.2003.
ASSOCHAM has suggested a Single Window approach by Banks/FIs for financing infrastructure
and green field projects which, inter-alia, should include the following:
(i) FIs/ banks shall enhance their financing in caseof power projects to 70% from
existing 50%.
(ii) Fls/banks should not expect very high rate of interest from infrastructure and
green field and service projects;
(iii) The appraisal system of Indian Financial Institutions/Banks should be in line with
international banking system.
(iv) Fls/Banks should liberally extend financial assistance to long gestation infrastructure
projects particularly telecom projects.
(c) (I) Fls/Banks already extend financial assistance upto 70% of the project cost in case
of power projects, in case, on detailed appraisal, the project is found to be
financially viable.
(ii) Interest rates are charged by Fls/Banks, based on their cost of funds and risk
perception about a particular project. Interest rates have softened considerably
in the recent past and bankable projectsare being financed by Banks/FIs at very
competitive rates. Loans to green field projects, being ofthe high risk variety, carry
relatively higher interest rate.
(iii) FIs/Banks have, over the years, evolved a detailed appraisal system, which is
quite robust and comparable with that adopted by the international banks.
(iv) A flexible approach with regard to financing norms is adopted by the FIs/ Banks,
while considering assistance to projects in a particular sector (say telecom) Fis also
fix the repayment schedules based on implementation period of the projects and anticipated
revenue generation (i.e projected cash flows).
(v) Financial Institutions have adopted a uniform approach towards financing norms such
as debt-equity ratio, promoters contribution, security structure, etc. For large projects
where more than one Fl/Bank is involved, one of the institutions takes the lead and
carries out detailed appraisal. The other FIs/Banks normally consider their assistance
based on the appraisal carried out by the lead institution. Similar financing norms/terms
and conditions are generally followed by all the participating institutions.