NaBFID MD says infra loan losses low, questions RBI's 5% provision proposal

Infra financier NabFID's managing director Rajkiran Rai on Friday questioned the RBI proposal to make lenders set aside 5 per cent on under construction projects, saying the reverses on such loans are very low.

Stating that there is a need to change perceptions surrounding infrastructure finance, Rai said the incidence of loans turning sour has reduced in the recent past and added that the same is evident in the risk-based pricing for such finance by banks.

"Where is 5 per cent coming from? Actually it (NPAs on infra loans) is less than 1 per cent," Rai said addressing the annual Fibac event here.

He conceded that if one looks at a ten-year period, the 5 per cent number may look true, but the same has improved drastically and added that infra loans are coming at as low as 8.75 per cent, as per a NaBFID study.

It can be noted that a few weeks ago, the RBI came up with draft guidelines reviewing the rules governing project finance which call for banks to set aside 5 per cent as ...