RBI project finance guidelines easier than draft, breather for lenders
The general provisions required for RBI, CRE, CRE-RH (CRE-KONUT Houses) and other infrastructure projects published by the Central Bank on Thursday decreased from a 5% to 1.25% to 1.25% during the construction phase of draft guides. Provisions for operational projects were reduced between 0.40%and 1%, and the provisions of operational infrastructure projects were kept as 0.40%as it is now. New instructions will come into force as of October 1st.
More importantly, new provisions do not apply to existing projects that will significantly increase capital costs for lenders. In addition to banks, infrastructure finance companies such as Power Finance Corp and rural Electrification Corp are most likely to be affected by these new norms proposed for the first time in May last year.
Am Karthik, assistant group president, financial sector ratings, ICRA LTD, the final guidelines are a relief for lenders, because the need to provide for both operational and construction projects lower. Karthik, “According to the expected loan loss assessment, the expected limited effect on NBFCs is currently closer to the need. In addition, the provisions can be applied forward from October 2025 and therefore the overall effect for the lenders will be limited.” He said.
For loans in infrastructure projects delayed more than three years since the beginning of commercial operations (DCCO), 0.375% of the lenders and 0.5625% of the provision of 0.5625% of the project loans (including CRE and CRE-RH), in each quarter of the Refi, standard collateral, applicable standard assets, applicable standard assets can be applied. This is also lower than 2.35% penalty for infrastructure projects that last more than two years stipulated by draft guidelines.
The lenders have been given to the lenders or financial parameters given by the lender, such as the standard of the credit facility, which is provided by the loan to 10% of the original project cost, including the interest to be paid during the construction phase, or by the lender, the equity ratio, the external credit cost of the debtor, and that the debtor is not supported or supported by the lender. Due to the extension, the increase in the scope of the project and the increase in the size of the project, the increase in the project cost, except for 25% or more of the original project, is allowed to be allowed to complete the previous external credit rating of the previous external credit rating, but not below the previous external credit degree. Borrower and failure to be classified as an asset (NPA) by complying with the costs that costly within 180 days from the end of the investigation period.
