A senior Reserve Bank of India (RBI) official announced on Thursday that final guidelines for project loans are expected to be released within the next two to three months.
The guidelines, which address Expected Credit Loss (ECL)-based provisioning, are currently in advanced stages of discussion.
The RBI has proposed a 5 per cent provision of the total project exposure until construction is completed.
Banks have expressed concerns about the potential impact on profits and are calling for a review of these provisions.
The official noted that the RBI has received up to 60 responses to the draft guidelines and is carefully reviewing all feedback.
While no specific implementation date was confirmed, the official indicated that the guidelines are likely to be finalised within the next two to three months but did not specify if they would come into effect from April 1 next year.
Regarding the ECL framework, the norms are nearing finalisation, though the official acknowledged some overlap between ECL and project finance guidelines.
The RBI aims to avoid disruptions and considers the overall impact of these guidelines before finalising them.
On the topic of higher delinquencies in microloans, the official assured there is no systemic risk, and any regulatory measures would address the sector broadly rather than targeting individual entities.
The November 2023 regulations, which increased risk weights on unsecured lending, were cited as an example of proactive intervention.
At the annual Global Fintech Fest, RBI Chief General Manager Vaibhav Chaturvedi urged financiers to adopt more responsible lending practices and ensure transparency and fairness in their dealings.
Indira Gandhi Institute of Development Research professor Ashima Goyal also highlighted that India's credit deposit ratios are significantly lower than those in other countries, with the government borrowing substantial resources.
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