The National Bank of Financing Infrastructure and Development (NaBFID) is planning to establish the country’s first data repository for the infrastructure sector to attract private investment by offering greater transparency and detailed information about new and ongoing infrastructure projects. Initially, the data will be sourced from banks, non-banking financial companies (NBFCs) and infrastructure companies, and later information from other government entities such as National Highways Authority of India (NHAI), PM Gatishakti and other stakeholders will be integrated into the repository. This will need regulatory approvals and support of the various government departments.
“Today we have authentic data for retail and MSME loans because we have credit bureaus but there is no such quality data for the infrastructure sector,” Rajkiran Rai G, managing director, told FE. “For data repository, we want to collect end-to-end data of all infrastructure projects and make it available for all stakeholders of infrastructure developments,” he added.
This will attract private investment in the infrastructure sector as it will give investors visibility about different stages of a project. The investors will be able to get the clear picture about how a particular project has progressed during different stages, right from start to its completion.
With the help of data repository, investors will also be able to differentiate and compare the performance of sub sectors within the infrastructure sector.
“Presently, it is very difficult for prospective investors to determine whether a road project is less risky than a thermal power project or a renewable project. The data repository will help them to take informed decisions before entering into a particular project,” Rai added.
The data repository will improve predictability for the lenders and help them to foresee signs of any potential stress building in a project.
Infrastructure sector has come into the spotlight recently after the Reserve Bank of India (RBI) released draft guidelines on infra financing. Under the draft guidelines for project finance, a bank has to set aside 5% of the exposure during the construction phase, which goes down as the project becomes operational. Several stakeholders in the infrastructure sector have questioned the high provisioning proposed by the banking regulator.
Having a dedicated data repository for infrastructure sector will help in making effective policies as it will help policy makers to understand the performance of sub sectors of the infrastructure sector. With the appropriate support from the regulator and the government, it can be made more real-time and can help in predictive analysis.
“NaBFID is not the entity only for financing. It is the entity to build the whole ecosystem around infra financing, developing new instruments, developing better project assessment capabilities and you know, helping by policy advocacy,” added Rai.
With the government’s increased focus on strengthening infrastructure, the lending for infra projects has risen sharply. Banks’ loan to the construction sector has risen by nearly 26% in the past five year while the loans to infrastructure sector have grown by 31%. Loans to the construction sector have grown from Rs 1.08 trillion in January 2019 to Rs 1.4 trillion as of March this year. Loans to infrastructure sector have grown from Rs 9.8 trillion in January 2019 to Rs 12.8 trillion as of March this year.
