Latest news with #ofCommencementofCommercialOperations
Time of India
7 hours ago
- Business
- Time of India
RBIs project financing norms will have negligible impact on banks, NBFCs: Report
The relaxation in project financing norms by the Reserve Bank of India ( RBI ) to banks and NBFCs will have a negligible impact on the profitability on their profitability and balance sheet, according to a report by Motilal Oswal. "We believe the impact of the revised norms on bank/NBFC profitability will be negligible, as the existing book remains unaffected," the report added. However, the report added, "For new project loans, any incremental provisioning cost is likely to be passed on to borrowers, especially in a declining rate environment, through yield adjustments." Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Here's The Average Price of a 6-Hour Gutter Guards Upgrade Read More Undo The report added that RBI's final project finance guidelines are a positive for banks and NBFCs, especially when compared to the stricter 2024 draft. The apex bank on Wednesday issued the final Reserve Bank of India (Project Finance) Directions, 2025, which lays down the comprehensive framework for income recognition, asset classification, and provisioning norms for project loans under implementation. Live Events The most notable relief came from the significantly eased provisioning requirements, which were cut to just 1 per cent during construction compared to 5 per cent proposed earlier and as low as 0.4 per cent post Date of Commencement of Commercial Operations (DCCO). These new guidelines will come into effect from October 1 current year. The draft guidelines proposed an enabling framework for the regulated entities (REs) for financing project loans, while addressing the underlying risks. RBI said that it received feedback from nearly 70 entities, including banks, NBFCs, industry bodies, academicians, law firms, individuals, and the Central Government. As per to new rules, the RBI introduced a principle-based regime for stress resolution in project finance exposures, applicable across all regulated entities (REs), ensuring a harmonised approach. The report stated that the easing norms reduce capital drag while still maintaining prudence. "Overall, the final norms strike a balanced approach, enabling continued flow of project finance with minimal impact on the profitability or balance sheet strength of lenders," the report further added.
Business Upturn
a day ago
- Business
- Business Upturn
RBI eases project finance rules, lending boost seen for banks and nbfc sector; IREDA, REC & PFC in focus
By Markets Desk Published on June 20, 2025, 07:29 IST In a major relief for banks and non-banking financial companies (NBFCs), the Reserve Bank of India (RBI) has significantly eased its proposed prudential norms on project finance. According to Citi Research, the final directions—effective October 1, 2025—are far more lender-friendly than the draft guidelines issued earlier, particularly in terms of general provisioning norms. Under the final framework, general provisioning requirements for project finance exposures—both infrastructure and non-infrastructure (including commercial real estate or CRE)—have been substantially reduced. For loans in the construction phase, the provisioning has been capped at 1.00% (1.25% for CRE), a significant relaxation from the earlier phased-in draft requirement of 5% by FY27 (2% in FY25, 3.5% in FY26, 5% in FY27). For exposures in the operational phase (i.e., post commencement of principal and interest repayments), provisioning has been scaled down to: 1.00% for CRE 0.75% for CRE-RH (residential housing) 0.40% for all other categories This is markedly softer than the earlier suggested 2.5% in the draft guidelines. For projects where the Date of Commencement of Commercial Operations (DCCO) has been deferred but remains classified as standard, the RBI has prescribed additional specific provisions. These are set at 0.375% per quarter for infrastructure loans, and 0.5625% per quarter for non-infra loans, including CRE and CRE-RH segments. Citi believes this shift removes a major overhang for lenders, particularly public sector banks and infrastructure-focused financial institutions like PFC, REC, and IIFCL. The biggest concern post the draft circular was a sharp pullback in long-gestation project lending owing to the capital burden posed by high provisioning. That risk now appears largely mitigated. By easing the regulatory cost of lending to large, long-term projects, the RBI has significantly improved the economic viability of project finance, which is essential for funding India's infrastructure ambitions. The move may also unlock higher credit growth in the infrastructure segment in FY26 and beyond. Ahmedabad Plane Crash Markets Desk at
