Regulatory updates

Regulatory updates

Updates from SEBI

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Currently, the RBI has issued a prudential framework for early recognition and resolution of stress in borrower accounts. However, this framework does not cover projects under implementation on account of change in Date of Commencement of Commercial Operations (DCCO).

In order to address the complexities involved in project finance, on 3 May 2024, RBI issued draft directions on a comprehensive framework applicable to financing of project loans11 This includes financing of projects in Infrastructure, Non-Infrastructure and Commercial Real Estate.. The draft directions aim to provide the regulated entities with an enabling framework for addressing the risks of project loans.

The draft framework, inter alia, provides guidance on the following aspects:

  • Phases of projects
  • Conditions for project finance
  • Resolution plans (including resolution plans involving extension of DCCO)
  • Provisioning for standard assets, NPAs, etc.
  • Timelines for compliance
  • Penal consequences for non-compliance

The comment period ended on 15 June 2024.

To access the text of the exposure draft, please click here

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