Evaluation of NPA in Infrastructure Sector with focus on Road sector

Abstract

Infrastructure is a key driver of the Indian economy. Government of India (GoI) plans to invest INR 100 trillion over the next 5 years. Indian banking system is the backbone of Indian economy and can play crucial role to achieve this target. When it comes to fund infrastructure projects, the main problem faced by Indian banking system is problem of Non-Performing Assets (NPA). In FY19, the road sector accounted for 10% of total NPA (~INR 4 trillion) in Infrastructure sector. This accumulated NPA impacts credit disbursement capacity to infrastructure sector. In this paper, we have focused on evaluation of NPA in road sector and reasons for NPA in road sector. We have attempted to examine steps taken by the Reserve bank of India (RBI) at policy level to address NPA issue in the banking sector. We have also evaluated steps taken of Ministry of Road Transport and Highways (MORTH) to address concerns of banking system and their expectations from the ministry. Based on the outcome of the study, we would like to make suitable suggestions to address the concerns of banking system and control NPA in infrastructure sector in general and road sector in particular