New Delhi: The insurance sector wants to be part of India’s road growth story. In a meeting held by Union minister for road transport and highways Nitin Gadkari with bankers in Mumbai on Friday, Kotak Mahindra Bank chief executive officer Uday Kotak signalled the sector’s eagerness.

A senior government official on condition of anonymity said: “Uday Kotak, along with LIC (Life Insurance Corporation of India) chairman said they were keen on exploring opportunities in post-construction lending for highway projects. Both insurance and highway projects have the basic characteristic of being long-term projects with investment returns by 15-25 years and can be gelled easily."

Gadkari liked the proposal and further possibilities are likely to be explored to bring in insurance sector investments, said the official on condition of anonymity.

Another proposal that caught the attention during the discussion was the “One Bank, One Project" mooted by State Bank India (SBI) chairman Rajnish Kumar.

“At present, a consortium of 10 or more banks finance projects and in case one raises objection, the project is scrapped. Under the proposed arrangement, either one bank will be financing the project or a maximum consortium of two banks will finance the project, with the lead bank being given powers to take all financial decisions," said the official quoted before.

The move comes at a time when banks have become cautious about investing in infrastructure projects because of growing bad debts and their past experience with BOT (built-operate-transfer) projects in the roads sector.

The meeting was attended by managing directors of several banks including Kotak Mahindra Bank, IndusInd Bank, SBI, Punjab National Bank, ICICI Bank, RBL Bank and the chairman of LIC.

Gadkari said the country’s roads sector has shown a great growth in the last four years. The first three months of the current fiscal year contributed 12% to gross domestic product, showing its immense potential.

“I have told bankers that I can give them a secured business of 5-7 lakh crore," Gadkari added.

The minister told banks that if they don’t come forward with investments he will consider approaching foreign investors.

A senior banker, who attended the meeting, said on condition of anonymity: “The banks discussed their limitations and fears. We told the minister that the NHAI (National Highways Authority of India) and an independent engineer should give in writing about the development of projects before the money is released to the concessionaire. Besides, institutional development credit should also be taken into account while calculating the costs for the projects."

During the last fiscal year, NHAI awarded 150 road projects for 7,400km, worth 1.2 trillion, the highest since its inception in 1995.

NHAI has also put out tenders for 232 projects since November 2017 under the Bharatmala project. The bids invited are for 11,200km of roads, worth around 1.96 trillion.

Earlier this year, the Economic Survey stated that India is expected to face a $526 billion infrastructure investment gap by 2040.

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