In relief to lenders, RBI relieves the provision of norms for infrastructure financing

Copyright © HT Digital Streams Limit all rights reserved. In its final guidelines, the RBI instructed that banks set aside only 1% of the standard asset supply for projects under construction. (Reuters) Summary The final guidelines of the RBI’s mandate that banks set aside only 1% of the standard asset supply for projects under construction. However, this has retained the supply requirement for operational projects at 0.4%. Mumbai: The Reserve Bank of India (RBI) on Thursday relaxed the supply norms for project financing loans, after appeal by borrowers. In its final guidelines, the RBI instructed that banks set aside only 1% of the standard asset supply for projects under construction. However, this has retained the supply requirement for operational projects at 0.4%. The supply requirement for commercial real estate loans under the construction will be slightly higher at 1.25%. The new norms come into effect from October. Also read: Retail investors want a piece of NSE. But no one sells. This is a major relaxation from the draft lines released in May last year, which suggested that lenders 5% of the loan amount for possible losses for a basis project, 2.5% for the already operational and 1%, should be set aside as soon as the project has sufficient cash flow to repay obligations. “Rationalization of standard asset requirement to 1% for projects in construction, which will gradually increase for each quarter of DCCO (date of commercial operations),” RBI said. Separately, RBI allowed the postponement of the date of commercial operations up to three years for infrastructure projects and up to two years for non-infra projects. It is a little more difficult of the concept norms, which has made up to four years of extension of DCCO due to all types of risks, including legal. Read also: Affordable housing financiers become market lovers After the RBI rate cut “Final guidelines for project financing as a relief for lenders, as for industry projects, continue the existing requirement at 0.4%, which is lower than 1%/2.5% indicated in the earlier concept. Banks, “Karthik Srinivasan, group head, financial sector ratings, ICRA, said. He sees a limited impact on NBFCs, as adequate provisions are provided according to the expected credit loss and the provision is currently closer to the requirements according to the guidelines. “The provisions also apply, from October 2025, and thus the total impact for borrowers will be limited,” he added. The RBI, under Governor Sanjay Malhotra, took steps to stimulate credit question. Since January, the central bank has reduced risk swings on bank loans to small borrowers and non-bank lenders, facilitating rules for gold loans with small tickets and relaxed rules regarding strict liquidity requirements for banks. In its final guidelines, the RBI retained the exposure to individual money shooters against no less than 10% of total exposure for underpinning projects where the total exposure of the borrowers is up to £ 1,500 crore. For projects where the total exposure of all lenders is more than £ 1,500 crore, the exposure floor for an individual money shooter must be 5% or £ 150, which is higher. Also read: Alcohol has become much more expensive in Maharashtra – but will still find that the RBI has relaxed the conditions for paying funds. According to the new norms, infrastructure projects under PPP Private Partnership (PPP) model must ensure only 50% of the land available before the payout. For non-PPP and commercial real estate projects, this requirement is attached to 75%. Currently, the National Highways Authority of India projects under the annuity model must ensure that 90% of the land is made available before the payout. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Banks #rbi Read Next Story