On Monday, Nitin Gadkari, minister of road transport and highways stated, the government is planning to propose a dedicated finance arm for NHAI as a result of drying up of funds from public sector banks. Further he added, “the suggestion for making of a financial arm to NHAI is absolutely right. I will take it to the finance ministry & will try to get approval for that.” 

Previously, he had referred to Power Finance Corporation & Railways Finance Corporation for power and railways, claiming that the road sector, although was doing better, was facing a shortfall of finance. 

Mr. Gadkari said, “now there is this sector which is contributing 2.5% to the country’s GDP, it is moving fast, economically viable, the internal rate of return is good, but public banks are not cooperating.” However, the ministry of highways has no plans to abandon the hybrid-annuity model (HAM), which has been operating for 4 years, although the banks have raised concerns over lending for such projects. Under HAM, the government offers 40%, while the rest of the construction cost will be arranged by the developer. Toll collection & land acquisition are also government responsibilities. 

Gadkari told “banks are not even in a position to sanction bank guarantee. We want to encourage the Indian Banks’ Association and will appoint a committee under the chairmanship of the ministry of road road transport & highways secretary to find a solution for Indian banks to be more friendly towards development in the infrastructure sector, particularly when the sector is growing faster.” 

Of 123 projects sanctioned under HAM, the total amount involved was ₹140,000 crore and the support received from banks was merely ₹ 47,000 crore, stated Gadkari on Monday, adding that “approximately, for 121 projects, 90% of them have been sanctioned by private banks. But the problem is, Nationalised banks aren’t supporting as much expected from them.”