MoRTH ropes in private banks in highway financing

In an encouraging development in the country’s road and highway sector, private banks like HDFC, Kotak Mahindra, IndusInd, Yes Bank and RBL have shown keen interest to fund more national highway projects also under the public-private partnership (PPP) model. This comes at a time when some of the public sector banks, reeling under massive NPAs, are hesitant to finance more road construction works, said official sources, claiming that top brass of top private banks in a recent meeting with transport minister Nitin Gadkari appeared ready to finance the projects executed under the hybrid annuity model (HAM) where government takes the maximum risk and financiers are largely insulated. Officials said private banks have concurred to fund at least 20 of 56 projects, which were awarded during the last quarter of 2017-18. Highways secretary and NHAI chairman Y S Malik claimed that the government is working on options including reaching out to foreign pension funds to buy long-term NHAI bonds with assured returns. So far, HDFC, RBL, and IndusInd Bank have financed a few HAM projects in the highway sector and now this basket of lenders is increasing.