Regulator proposes tighter guidelines on infra funding
Reserve Bank of India (RBI) has proposed to overhaul rules governing project lending to enable the flow of funds to infrastructure and, at the same time, ensure that the risk metrics are under control. It has stipulated minimum exposure of banks in consortium lending and prescribed norms to defile credit events.
The regulator issued draft guidelines pertaining to the prudential framework for financing projects in the infrastructure, non-infrastructure and commercial real estate sectors. It said the guidelines lay down the regulatory dispensations regarding the date of commencement of commercial operations (DCCO) of such projects.
In the case of projects financed under consortium arrangements, where the aggregate exposure borrowing is up to Rs 1,500 crore, each lender should have a minimum exposure of 10%. If the aggregate exposure is more than '1,500 crore, individual exposure should not be less than 5% or '150 crore, whichever is higher. However, after the DCCO, lenders may acquire from or sell exposures to other lenders — new or existing — in the multiple banking or consortium arrangements.
RBI has also proposed that banks provide 5% of the funded outstanding on all existing as well as fresh exposures on a portfolio basis.
In its draft guidelines, the RBI discouraged banks from designing finance agreements that allow a moratorium on repayments beyond the DCCO. The repayment structure should factor in lower initial cash flows, it said. However, if lenders decide to grant a moratorium on repayment beyond the
