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RBI: RBI becomes strict on banks regarding infrastructure loans, preparations to implement strict rules

Infra Project Financing: In the last few years, many banks are in trouble due to big infrastructure loan defaults. This bad loan has a major role in their NPA. Since 2012-13, many banks have been in trouble due to infrastructure loan defaults. This is having a negative impact on the banking system of the country. Now the Reserve Bank of India (RBI) has decided to be strict regarding the financing of infrastructure projects. RBI is going to bring new rules for giving loans to infra projects. The framework of the new rules has been prepared and time has been given by RBI till June 15 to give suggestions on it.

Banks will have to continuously monitor the project

This proposal has been brought forward by RBI on Friday. In this, banks have been asked to take a careful decision before giving loan to under construction infrastructure project. Also monitor the project continuously so that any small problem does not turn into a big one. This draft of new rules has been prepared after learning from the experiences of banks regarding such projects. There have been major defaults in such projects. Due to this the situation of banks has deteriorated. Now infrastructure projects are coming up rapidly in the country. The government is also promoting these projects to strengthen the economy.

5 percent of the loan amount will have to be kept separately

According to the RBI draft, banks will have to keep aside 5 percent of the loan amount during the construction of the project. It can also be reduced to 2.5 percent after the project becomes operational and to 1 percent once the repayment status is reached. According to the RBI website, this amount is currently kept at 0.4 percent in the circular of 2021. Banks will have to pay serious attention to any problem arising in the project. Also, solution options will have to be kept ready. The central bank has said that if several banks are financing projects up to Rs 15 billion by forming a consortium, then they will have to keep 10 percent of the loan amount as reserve.

If there is a possibility of delay, the loan category will have to be changed.

According to the RBI draft, banks will have to keep track of when the infra project is being completed. If there is a possibility of delay then the bank will have to take steps from its own side. RBI has said that if there is a possibility of delay in any project for more than 3 years, then it will have to be categorized as stress loan from standard loan.

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