HYDERABAD: Bank funding to private projects fell sharply by 57 per cent in the past ten years, according to the Reserve Bank of India. If banks and financial institutions provided companies with `4 lakh crore in FY10, that investment crashed to `1.76 lakh crore by FY19. In fact, investment from these traditional sources has been on a steady decline since FY11 and even touched a low point of `87,253 crore in FY15. While it recovered the following year, the pace of recovery, it appears, remained weak. Understandably, the number of projects sanctioned by banks and financial institutions too fell 43 per cent during the past decade.
From 729 projects funded in FY10, it fell to 414 in FY19. The size-wise distribution of projects throws up an interesting nugget that the private investment slump was marked by the absence of both small and mega projects. While, large and mid-size category either saw a moderate slowdown or maintained their momentum. For instance, the number of projects each with investments of less than `100 crore fell from 439 in FY10 to 215 in FY19. Similarly, mega projects of above `5,000 crore plunged from 22 to 5. However, large projects between `500-`1,000 crore and `1,000- `5,000 crore remained static at around 40, while the mid-level between `100- `500 crore fell moderately from 189 to 115.
Moreover, the number of new projects undertaken reduced from 454 in FY11 to 320 in FY19, while those undergoing expansion and modernisation stood at 78 down from 224. Among states, Maharashtra took the biggest hit with the number of projects sanctioned by banks and financial institutions plunging from 117 in FY10 to 37 in FY19. Similarly, Andhra Pradesh also saw a significant dip from 73 to 29 followed by Tamil Nadu from 66 to 33.
Within industries, metal and metal products took the sharpest hit when banks and FI’s funding fell from 134 projects in FY10 to 15 in FY19. But the good news is, their share in the total cost of funding relatively smaller at 18.1 per cent in FY10 and was down to 2.7 per cent in FY19. Infrastructure accounted for the biggest slice in total funds sanctioned at 49 per cent in FY10, saw an improvement in FY19 when its share rose to 58.5 per cent.
Within infrastructure, the biggest chunk belonged to power sector comprising nearly 31 per cent share in the sanctioned total project cost in FY10, but fell to 25 per cent by FY19. The number of projects, however, increased from 75 to 81 during the same period implying that the quantum of funds invested may perhaps have undergone a reduction.
The meat cleaver was the telecom sector, which accounted for about 16 per cent share in project cost in FY10, which started the downward journey from FY11 and never recovered. From about 6 projects, the number fell to 2 in FY11 and to zero in FY18 and FY19. Ports and airports, however, saw an uptick with their share in the total project cost rising from next to nothing in FY10 to about 15 per c e n t i n FY19.