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RBI’s stricter Regulations for Project Finance

Facts for Prelims (FFP)


Source: ET

 Context: The Reserve Bank of India (RBI) has proposed stricter regulations for project finance, aiming to reduce risks in infrastructure projects. These rules include higher provisioning during construction and classifying delayed projects as non-performing assets.

According to RBI guidelines, lenders must maintain 5% provisions for projects under implementation. Provisioning involves banks setting aside funds from their profits to cover potential losses.

Lenders fear these rules could hinder project viability and slow India’s capital expenditure momentum.