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IBA wants road projects under priority sector

The Indian Banks Association has asked the government and the RBI to accord ‘priority sector’ status to road projects. IBA said road construction plays a key role in nation building and as such it should be classified as priority sector. The ministry of road transport and highways has plans to write to RBI endorsing the proposal. The tag of priority sector lending will help road projects to get better bank funding as 40% of all lending by banks has to be to this sector. Besides, such loans also attract lower interest rates. At present, agriculture, education, renewable energy and MSME among others qualify for priority sector lending. IBA has also suggested permitting flexible restructuring of long term project loans with debts below Rs 500 crore. It has also suggested that RBI should consider relaxing NPA norms for loans to this sector. As many as 19 projects entailing a capital investment of Rs 40,000 crore are stuck for long and the government is trying to revive those.

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