Final guidelines on project loans in two to three months – RBI

MUMBAI: The final guidelines for project loans, which seek to mandate lenders to make higher provisions, are expected to be announced in the next two to three months, and so are the expected credit loss-based provisioning norms, according to a senior Reserve Bank official.

The central bank has proposed to make banks set aside five per cent of their total exposure to a project till the construction of the project is on. Fearing a hit on profit, banks have been asking for a relook into it.

The official also said the new norms regarding the expected credit loss (ECL)-based provisioning are also in an advanced stage of discussion. Both regulations seek to tighten the lending norms so that better assets are created and thus will hit the bottom line of lenders.

So far the regulator has received around 60 responses on the project loans draft, and the central bank is going through all the suggestions, chief general manager Vaibhav Chaturvedi told reporters on the sidelines of the ongoing global fintech summit here Thursday.