RBI Set to Announce New Project Loan Guidelines

The Reserve Bank of India is expected to announce new project loan guidelines within two to three months. These guidelines, which involve ECL-based provisioning, are currently in advanced discussions. Banks have raised concerns about potential profit impacts, while RBI assures a non-disruptive approach.

The Reserve Bank of India is gearing up to unveil new project loan guidelines in the next two to three months, according to a senior RBI official. The guidelines, centered around Expected Credit Loss (ECL)-based provisioning, are in advanced discussion stages.

As part of the proposal, the central bank suggests setting aside 5 per cent of the total project exposure during construction. Banks have expressed concerns about the impact on profits and have requested a re-evaluation of the norms. The RBI has received up to 60 responses on the draft guidelines and is reviewing all suggestions.

Despite fears of potential profit hits, RBI assures that their intention is to be non-disruptive while finalizing the guidelines. In the same vein, the RBI has addressed higher delinquencies in microloans, noting that there's no systemic risk. Regulatory interventions, if necessary, will be sector-wide rather than entity-specific.

(With inputs from agencies.)