Supreme Court: Compassionate Appointees Cannot Later Claim Entitlement to a Higher Post  ||  NCLAT New Delhi: Insolvency Pleas Cannot Be Admitted When Information Utility Records Show a Dispute  ||  NCLAT: Issuing Cheques For Another Entity’s Liabilities Does not Constitute Operational Debt  ||  NCLAT: SEBI Penalties Imposed After Liquidation Begins are Not Admissible as Claims  ||  NCLT Reiterates That an Auction Purchaser is Not Liable For a Corporate Debtor’s Electricity Dues  ||  Delhi HC Upholds Interim Injunction Against 'Power Flex' in Bata’s Trademark Infringement Case  ||  Calcutta High Court: Mere Presence of Alcohol in Post-Mortem Cannot Bar Compensation to Heirs  ||  Kerala High Court: Review Petition Cannot Be Entertained Against an Order Refusing Arbitration  ||  J&K High Court: Umadevi Judgment Does not Justify Perpetual Temporary Employment  ||  SC: Public Premises Act Prevails over State Rent Laws For Evicting Unauthorised Occupants    

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 2025 - All Rights Reserved