RBI Announces Infraloan Guidelines, Lenders to Keep 5% Provision Loan For Under-Construction Projects

Infraloan: On Monday, the Reserve Bank of India announced a proposed circular on the Infraloan. The RBI has proposed that as long as these projects are under construction, the lenders should keep 5% of the loan for under-construction infrastructure projects as a provision. Along with this, the lenders were also asked to do monitoring of any upcoming stress. As soon as the project starts, the amount of provision should be reduced to 2.5%. After that, when the projects start generating enough cash, the amount of provision should be reduced to 1%. 

What is Infraloan?

In 2021, the RBI released a circular in which a loan of 0.5% for stress-free or non-stress projects was issued. The exposure of the consortium of lenders to finance projects worth more than 15 billion rupees should be at least 10%. If there is a delay in this, then they will have to decide even after increasing the provision.