A new financial consortium comprising seven PSU banks and two financial institutions has been formed with the aim of creating a greater uniformity in approach and terms of lending for speedier sanction and earlier financial closure of large infrastructure projects worth over Rs 1,000 crore each.

These financial institutions are State Bank of India, Punjab National Bank, Bank of India, Bank of Baroda, Canara Bank, Union Bank, IDBI Bank, IIFCL and LIC. These institutions will form a nodal approving committee, and once a project is approved, even non-participating banks can participate in the funding. Lender with the largest exposure will be the lead arranger for the project.

The scheme will be operational from July. At the first level will be a coordinating committee consisting of general managers who will whet proposals and forward them to a coordinating group where decisions relating to project funding, lead institutions will be made. Finally, they will be sent to the core committee which will consist of CMDs and deputy MDs of banks.

The new system will also mitigate the risks of any asset liability mismatch and is being encouraged by the lenders.

Smooth and easy access to funds has often been a major bottleneck in infra projects. SBI is the largest infrastructure financier with a loan book of Rs 76,503 crore. Of this, the power sector accounts for Rs 37,055 crore, road sector for Rs 15,508 crore, Rs 14,590 crore to telecom and up to Rs 9,003 crore to others.

However, the consortium will not have a fixed corpus.