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Canada News.Net
23-06-2025
- Business
- Canada News.Net
RBIs project financing norms will have negligible impact on banks, NBFCs: Report
New Delhi [India], June 21 (ANI): 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.' 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. 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. (ANI)
India Gazette
21-06-2025
- Business
- India Gazette
RBIs project financing norms will have negligible impact on banks, NBFCs: Report
New Delhi [India], June 21 (ANI): 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.' 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. 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. (ANI)
Mint
21-06-2025
- Business
- Mint
RBIs project financing norms will have negligible impact on banks, NBFCs: Report
New Delhi [India], June 21 (ANI): 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." 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. 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.
Time of India
21-06-2025
- 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 Standard
20-06-2025
- Business
- Business Standard
PFC, REC gain as RBI unveils final project finance norms
Shares of Power Finance Corporation (PFC) and REC rose by 3.33% to 5.37% after the Reserve Bank of India (RBI) issued its final Project Finance Directions, 2025. The comprehensive framework, aimed at streamlining and standardizing project loan regulations across banks, NBFCs, and cooperative lenders, comes into effect from 1 October 2025. The market responded swiftly to the announcement, with shares of key project financiers surging in morning trade. PFC jumped 5.37%, while REC climbed 3.33%, as investors welcomed the regulatory clarity and operational flexibility promised by the new guidelines. Compared to the RBIs draft proposal from May 2024, which had outlined a steeper 5% standard asset provisioning for under-construction projects, the final guidelines dial things down substantially. Now, lenders will need to set aside just 1% for infrastructure projects and 1.25% for commercial real estate (CRE). Thats a major breather for dedicated project financiers like REC and PFC, who had been staring at potentially higher capital requirements under the earlier draft. The RBI has rationalized the norms around the extension of the 'Date of Commencement of Commercial Operations' (DCCO), allowing extensions of up to three years for infrastructure projects and two years for non-infrastructure ones. Lenders will also have greater flexibility to assess and decide on DCCO extensions within these ceilings based on commercial viability. The provisioning requirements for under-construction projects have been streamlined as well. Lenders will now set aside a standard 1% for such exposures, with a gradual increase depending on the length of DCCO deferment. In the case of under-construction commercial real estate, the initial provisioning will be slightly higher at 1.25%. For projects that have already achieved financial closure, existing provisioning rules will continue to apply, ensuring a smooth transition to the new regime. Once projects become operational, the provisioning rates are clearly defined: 1% for commercial real estate, 0.75% for CRE-residential housing, and 0.40% for other project loans. This structured approach is expected to bring predictability to provisioning and risk management practices. The market view is clear: the final norms are far more balanced and pragmatic. They reduce capital drag without compromising prudential standards. The relaxed provisioning norms, coupled with the exclusion of existing loan books from the new rules, would have negligible impact on NBFC and bank profitability. For power sector financiers like PFC and REC, the relief is doubly reassuring. Even the marginal provisioning required under the new norms will be comfortably absorbed through existing impairment reserves. Importantly, the directions only apply to loans achieving financial closure on or after 1 October 2025, meaning current portfolios are unaffected. While the earlier draft had also proposed a stringent 360-day performance requirement for loan upgrades -- another red flag for lenders, this too has been relaxed in the final version. The overall tone of the guidelines has shifted from caution-heavy to growth-accommodating, signalling the RBI's intent to support long-term infrastructure finance without straining lender balance sheets.
