Amidst growing concern of lenders' asset liability mismatch, an HDFC Bank report says the share of bank funding to the infrastructure sector soared to 13.4 per cent in FY'13 from a meagre 1.6 per cent of the total credit thirteen years ago.
"The share of bank finance to the infra sector, within the overall bank funding, has increased from 1.6 per cent in FY'01 to 13.4 per cent in FY'13. Outstanding bank credit to the infra sector has seen a CAGR of 43.4 per cent over the last 13 years against an overall CAGR of bank finance to all industries at 20.4 per cent during the same period," HDFC Bank Chief Economist Abheek Barua said in the report.
More recently, between March 2008 and March 2013 alone, banks' exposure to infrastructure has grown by more than three times, he said.
This clearly suggests that banks have been financing infrastructure projects despite the fact that NPAs and restructured assets in this space have increased quite substantially lately, Barua added.
Many rating agencies like Crisil, S&P and Fitch have pegged the recast loans of the banking system will touch 4.4 per cent of the total loan book March 2015.
The gross NPAs (Net Performing Assets) and restructured standard advances for the infra sector, together as a percentage of total advances to the sector, has increased considerably from 4.7 per cent at end March 2009 to 17.4 per cent at end March 2013.
Out of this, the power sector had the highest at 19.40 per cent in FY'13 up from 4.54 per cent in FY'09, while for the telecom sector this rose from 1.76 per cent in FY'09 to 15.64 per cent in FY'13, the HDFC Bank report said.
According to the project monitoring group under the PMO, between June and October 9 this year, as many as 328 projects involving an investment of Rs 15.6 trillion were cleared, an increase from 122 worth Rs 5-7 trillion.
Of these projects, the power sector (44 per cent) accounts for the largest chunk of stalled projects, followed by petroleum and natural gas at 11 per cent and road, transportation and highways at 10 per cent.
Out of the 328 projects, 94 have been cleared completely worth Rs 3.5 trillion.
According to the World Bank's ease of doing business report, India ranked a low 132 out of 185 economies in 2013, which is clear from the fact that around Rs 20 trillion worth of projects are stuck for want of clearances.