The GOI is pushing Indian Banks, to lend for NMP. The private sector has to pay, Rs 7,00,000 crores, to the GOI for the NMP.

These are 1st time or limited expertise entrepreneurs, who will tie up with International JV partners,for the infra projects.

When Indian banks lend to conventional greenfield or brownfield projects,they take an Equitable or English Mortgage,PLUS a hypothecation of specific assets, escrow accounts and Guarantees of Promoters ………, and STILL THE LOANS ARE NOT REPAID,and the bank is left with worthless assets.

The GOI now wants these very banks,to lend to NMP projects,where there is no mortgageable asset.There is only the technical know of the JV partners,and the promoters financial contribution ! The past empirical pattern of cash inflows,from the infra asset – might not exist or might not be material,& WILL CERTAINLY NOT JUSTIFY the NMP loan,to the promoters!

Escrow is NOT a loan security – it is a secured payment gateway !

Still the banks will lend the funds,as the banks are indirectly funding the GOI ,IA the NMP promoter ! So it is a secured loan – to the extent that,if the promoter goes bust – then a new promoter steps in,and loses all the investment in the NMP Project !

In essence,NMP bank loans is a free ride for the promoters,who need to invest just the seed capital to get in a Foreign JV partner,and JV funds,and then take the balance,from the banks. The promoter has to TRY HIS BEST,to drive efficiencies and ALT revenue streams – and if he succeeds – HE HAS A JACKPOT.If not,a NEW PROMOTER comes in.

A bank which cannot appraise a steel NPA – will OBVIOUSLY not be able to appraise the FORECASTED EFFICIENCIES OF THE NMP projects.SO IN COMES THE “CONSULTANT” – whose report will be relied upon by the BANKS – as such.All the NMP consultants used by the GOI and the Banks, HAVE BEEN ON THE PAYROLL,OF THE INTERNATIONAL AND INDIAN INFRA COMPANIES !

As a thought – the GOI could have hived off the NMP assets,into a SPV and raised International funds and Bank loans ! Y do a lease ? The terms of funds would be better for the GOI,in a SPV ! The JV partners in the SPV,would drive EFFICIENCIES – and there would be no need for the GOI,to share the EFFICIENCY PROFITS with the lessee !

SO Y DID THE GOI DO THE LEASE MODEL ?

U GOTTA BE KIDDING ME ! dindooohindoo

THE GOI WANTS THE PANWARI BANIAS TO MAKE BILLIONS,AND THEN SHARE IT WITH THE BJP !