Highway contractors seek quicker credit at lower rates
They also want a quicker clearing of outstanding payments and restructuring of terms of credit
In a letter to Prime Minister Narendra Modi, the hard pressed road and highway infrastructure building contractors have sought instant credit at concessional rates from banks.
In addition, they also want a quicker clearing of outstanding payments and restructuring of the terms of credit, in case of default. The sector has been badly affected by the nationwide lockdown on account of the coronavirus.
In the letter, chairman, Srei Infrastructure Finance, Hemant Kanoria, reiterated that the central government may consider certain regulatory, liquidity and administrative measures to lessen the stress of the concessionaries and contractors in the road infrastructure sector. In the event of the concessionaire/contractor not being able to service project loan during or even beyond the lockdown, banks, in consultation with the borrower, should rework the terms of the loan and its repayment schedule on the basis of future cash flows, so that projects do not come to a standstill.
At the same time, the account should remain a standard asset in the bank books to preserve the rating of the concessionaire / contractor. The industry has sought a provision of additional credit at concessional rates during the lockdown and for a period of three months thereafter from banks or from a special fund.
There should be an expeditious clearing of outstanding payments as well as clearance of the sum of money stuck in arbitration. Other liquidity measures which the government should consider include easier bank guarantees, time bound approvals, and easier exit routes.