State-owned lenders are planning to approach the government seeking changes to terms governing performance bank guarantees (PBGs), timely compensation from concessioning authorities, and greater immunity for board members sanctioning funds for infrastructure projects.
Overall, the lenders are demanding a unified set of rules for invoking performance bank guarantees, which are issued against the progress of a contract. They have also expressed a demand for timelines fixed for concessioning authorities to decide on compensation if a project is delayed on account of reasons such as land acquisition that are beyond the remit of the project developer. According to some bankers, comprehensive rules are required so that these issues are resolved or the whole liability is on the banks with no skin in the game for some stakeholders, including the monitoring authorities. Moreover, they have also sought greater immunity for their board members for commercial decisions and will reiterate their demand for norms, such as the exemptions granted to top executives of the National Bank for Financing Infrastructure and Development (NaBFID).
Additionally, the burden of supporting infrastructure finance will totally fall on state-run banks as private sector financial institutions will shy away on account of such high provisioning norms as proposed by the Reserve Bank of India (RBI).
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