P&H HC Quashes Case over Allegations Against Judge, Orders Police Awareness on S.215 BNSS  ||  Chhattisgarh HC: Scheduled Tribe Persons Can Voluntarily Choose to be Governed by Hindu Marriage Act  ||  Kerala HC: Intra-Court Appeal Maintainable Against Ex Parte Ad Interim Orders Affecting Remedies  ||  Kerala HC: Failure To Record Victim’s Intellectual Disability isn’t Fatal if Competent to Testify  ||  Calcutta HC Reduces Man's Sentence, Holding Bamboo Stick or Rod Not A Weapon Likely To Cause Death  ||  Kerala HC: Siblings Cannot Claim Compensation for ‘Loss of Love’ in Motor Accident Death Cases  ||  Gujarat HC: Judicial Fixation of Standard Rent Inapplicable to New Construction After 2001 Amendment  ||  Orissa HC: 60-Day Disposal of DV Act Plea May Not be Practical but Long Adjournments Must be Avoided  ||  Madras HC: Minister Regupathy Gave a Mischievous Political Twist to the Thiruparankundram Issue  ||  Jharkhand HC Cautions Officers, Says Citing Proposed SLP in SC to Delay Compliance is ‘In Bad Faith’    

Reserve Bank of India releases draft direction on the prudential framework applicable to financing of project loans - (03 May 2024)

Banking

With a view to strengthen the extant regulatory framework governing project finance and to harmonise the instructions across all regulated entities, RBI released the draft Direction on the prudential framework applicable to financing of project loans. Due to the complexities involved in project finance, the revised guidelines seek to provide an enabling framework for the regulated entities for financing of project loans, while addressing the underlying risks.

Lenders desirous to have project finance exposures shall have a Board-approved policy for resolution of stress in the projects on occurrence of a credit event. For any project, all mandatory pre-requisites should be in place before financial closure. An indicative list of such pre-requisites includes availability of encumbrance free land and/or right of way, environmental clearance, legal clearance, regulatory clearances, etc., as applicable for the project. However, for infrastructure projects under PPP model, land availability to the extent of 50% or more can be considered sufficient by lenders to achieve financial closure.

A positive net present value (NPV) is a prerequisite for any Project financed by lenders. Any subsequent diminution in NPV during the construction phase, either due to changes in projected cash flows, project life-period or any other relevant factor which may lead to credit impairment, shall be construed as a credit event. Accordingly, lenders shall get the project NPV independently re-evaluated every year.

Tags : RBI   NET PRESENT VALUE   NPV  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved