PSU Banks chiefs said they have told finance minister P Chidambaram, at a recent meeting, that delay in approvals from states could lead to restructuring of loans along with provisions and subsequent decline in profitability which will then hinder the call to cut rates for borrowers.
Some PSU chiefs also said that those loans could become Non-Performing Assets (NPAs), if not given way by the state governments.
Indian banks, under pressure from FinMin to reduce NPAs and interest rates, said that they had sanctioned huge loans to infrastructure companies which are now struggling to get clearances from various regulatory bodies.
The move came at a time when the government has been planning to form a National Investment Board (NIB) to expedite the approvals for projects worth over Rs 1,000 crore.
Bankers also raised doubts over ability of the government to execute projects worth Rs 41,00,000 crore during next plan which is aimed at achieving the growth rate of 9 per cent.