These have been announced by RBI earlier also. RBI had announced the introduction of these standards for the first time in September, 2023. Opinions on the proposals have been sought from the concerned parties till June 15.
Important steps have been taken from time to time by the Reserve Bank of India (RBI). Now important proposals have been given by RBI. An important update has been issued by RBI regarding the rules related to project finance. RBI proposed to make the rules related to giving loans to the projects under implementation stricter. The central bank’s draft rules propose to classify projects according to their stage and make a higher provision of up to five per cent during the construction phase.
Loan
In the last loan cycle, there was increased pressure on the books of banks due to project loans. The standard asset provision is 0.40 per cent. Under the proposed norms, a bank will have to set aside five per cent of the loan during the construction phase. However this ratio reduces as the project becomes operational.
it was announced earlier
These have been announced earlier also by RBI. The introduction of these standards was first announced by RBI in September 2023. Opinions have been sought from concerned parties on the proposals till June 15. As per the proposed norms, financial provisions can be brought down to 2.5 per cent of the financed balance once the project reaches ‘operational stage’ and then reduced to one per cent subject to fulfillment of certain conditions.
Essential system
These guidelines specify the criteria for updating accounts with details related to resolution of debt stress and call for validation. The financial institution will update any changes in the parameters of the project finance loan within 15 days. In this case the necessary system will be installed within three months of the issue of these instructions.
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