Skip to main content

Main menu

  • Latest
  • Issues
    • Published Ahead of Print (PAP)
    • Current Issue
    • Latest Articles
    • Archive
  • About
    • Journal Information
    • Editorial Board
    • About IIJ
  • Information for
    • Advertisers and Sponsors
    • Agents
    • Authors
    • Institutions
  • Events
  • Videos
  • Institutional Investor Journals: Home
    • The Journal of Alternative Investments
    • The Journal of Derivatives
    • The Journal of Fixed Income
    • The Journal of Index Investing
    • The Journal of Investing
    • The Journal of Portfolio Management
    • The Journal of Private Equity
    • The Journal of Retirement
    • The Journal of Trading
    • The Journal of Wealth Management
    • Practical Applications
  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter
  • Visit IIJ on Facebook

User menu

  • Register
  • Subscribe
  • My folders
  • My alerts
  • Log in

Search

  • Advanced search
The Journal of Structured Finance
  • Institutional Investor Journals: Home
    • The Journal of Alternative Investments
    • The Journal of Derivatives
    • The Journal of Fixed Income
    • The Journal of Index Investing
    • The Journal of Investing
    • The Journal of Portfolio Management
    • The Journal of Private Equity
    • The Journal of Retirement
    • The Journal of Trading
    • The Journal of Wealth Management
    • Practical Applications
  • Register
  • Subscribe
  • My folders
  • My alerts
  • Log in
The Journal of Structured Finance

The Journal of Structured Finance

Advanced Search

  • Latest
  • Issues
    • Published Ahead of Print (PAP)
    • Current Issue
    • Latest Articles
    • Archive
  • About
    • Journal Information
    • Editorial Board
    • About IIJ
  • Information for
    • Advertisers and Sponsors
    • Agents
    • Authors
    • Institutions
  • Events
  • Videos
  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter
  • Visit IIJ on Facebook
Article

Restructuring Project Finance Bank Debt in India: Information Asymmetry and Agency Costs

Vikas Srivastava
The Journal of Structured Finance Fall 2015, 21 (3) 106-114; DOI: https://doi.org/10.3905/jsf.2015.21.3.106
Vikas Srivastava
is an associate professor at the Indian Institute of Management in Lucknow, India. vikas.srivastava@iiml.ac.in
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
  • Article
  • Info & Metrics
  • PDF
Loading

This article requires a subscription to view the full text. If you have a subscription you may use the login form below to view the article. Access to this article can also be purchased.

Abstract

Mounting non-performing assets (NPAs), particularly for project finance bank loans to public–private partnership (PPP) projects in the infrastructure sector, is a cause of concern for the Indian banking industry. In order to tackle the problem of NPAs, the Reserve Bank of India (RBI) advises banks on joint and corrective actions that include early detection of declines in asset quality, infusions of equity, conversion of debt into equity, fresh management commitments, and distressed sales of assets. This article presents a conceptual framework and suggests that in economies such as India’s, there is information asymmetry among the key stakeholders of PPP projects. This makes it difficult for banks to structure perfect deals or monitor loans after they have been made. Information asymmetry leads to agency costs for the project as sponsors’ actions are sometimes directed at shedding the risk to the banks and exiting the project. The data show that debt has increased and that the interest coverage ratio has declined for infrastructure companies in the last five years. The author calculates the new risk premiums that equity investors will demand as debt piles up in the balance sheets of infrastructure companies. Data from Moody's Investors Service are analyzed to consider the feasibility of distressed asset sales. The author argues for a simple solution: Policies for project finance debt restructuring should aim at, in addition to financial solutions, addressing the structural problems of information asymmetry and agency costs among the key stakeholders. This should lead to a solution for NPAs that is sustainable in the long run.

  • © 2015 Pageant Media Ltd
View Full Text

Log in using your username and password

Forgot your user name or password?

Purchase access

You may purchase access to this article. This will require you to create an account if you don't already have one.
PreviousNext
Back to top

In this issue

The Journal of Structured Finance: 21 (3)
The Journal of Structured Finance
Vol. 21, Issue 3
Fall 2015
  • Table of Contents
  • Index by author
Print
Download PDF
Article Alerts
Sign In to Email Alerts with your Email Address
Email Article

Thank you for your interest in spreading the word on The Journal of Structured Finance.

NOTE: We only request your email address so that the person you are recommending the page to knows that you wanted them to see it, and that it is not junk mail. We do not capture any email address.

Enter multiple addresses on separate lines or separate them with commas.
Restructuring Project Finance Bank Debt in India: Information Asymmetry and Agency Costs
(Your Name) has sent you a message from The Journal of Structured Finance
(Your Name) thought you would like to see the The Journal of Structured Finance web site.
Citation Tools
Restructuring Project Finance Bank Debt in India: Information Asymmetry and Agency Costs
Vikas Srivastava
The Journal of Structured Finance Oct 2015, 21 (3) 106-114; DOI: 10.3905/jsf.2015.21.3.106

Citation Manager Formats

  • BibTeX
  • Bookends
  • EasyBib
  • EndNote (tagged)
  • EndNote 8 (xml)
  • Medlars
  • Mendeley
  • Papers
  • RefWorks Tagged
  • Ref Manager
  • RIS
  • Zotero
Save To My Folders
Share
Restructuring Project Finance Bank Debt in India: Information Asymmetry and Agency Costs
Vikas Srivastava
The Journal of Structured Finance Oct 2015, 21 (3) 106-114; DOI: 10.3905/jsf.2015.21.3.106
Permalink:
del.icio.us logo Digg logo Reddit logo Twitter logo CiteULike logo Facebook logo Google logo LinkedIn logo Mendeley logo
Tweet Widget Facebook Like LinkedIn logo

Jump to section

  • Article
    • Abstract
    • PPP PROJECTS AND INFORMATION ASYMMETRY
    • INFORMATION ASSYMMETRY AND AGENCY COSTS
    • RESTRUCTURING PROJECT DEBT: EQUITY INVESTOR CONCERNS AND DISTRESSED SALES
    • CONCLUSION
    • REFERENCES
  • Info & Metrics
  • PDF

Cited By...

  • No citing articles found.
  • Google Scholar

More in this TOC Section

  • Aircraft Pre-Delivery Payment Financing Transactions—Updated for 2018
  • Automotive Residual Values in a Changing Environment
  • Normalizing the Federal Reserve’s Balance Sheet: The Impact on the Mortgage-Backed Securities Market
Show more Article

Similar Articles

Institutional Investor Journals
1120 Avenue of the Americas
New York, NY 10036

Stay Connected

  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter
  • Visit IIJ on Facebook

ABOUT US

  • Home
  • About IIJ
  • Nobel Laureates
  • Events
  • Awards
  • Careers

OUR OFFERINGS

  • Guides
  • Permissions and Reprints
  • Digital Archives

GET INVOLVED

  • Advertise or sponsor
  • Publish your work
  • Subscribe
  • Agents

CUSTOMER SERVICE

  • Contact IIJ
  • FAQ's
  • Feedback
  • Publishing Schedule 2017/2018
  • Code of Ethics
  • Subscribe Now
  • Log In

© 2018 Pageant Media Ltd | All Rights Reserved | ISSN: 1551-9783 | E-ISSN: 2374-1325

  • Site Map
  • Terms & Conditions
  • Cookies
  • Privacy Policy