​RBI’s Framework to Strengthen Project Financing

On 6th May, 2024, the Reserve Bank of India (RBI) released a draft regulatory framework for long gestation period financing for projects such as infrastructure, non-infrastructure and commercial real estate sectors.

Aim

  • The proposed guidelines are aimed at bolstering risk management in project financing.

Rationale

  • As per the Ministry of Statistics and Programme Implementation’s March, 2024 review of 1,837 projects, 779 of them were delayed and 449 faced cost overruns.
  • Infrastructure projects typically have long gestation periods, increasing the likelihood of financial viability challenges.

Major Highlights Proposed Framework

  • Income Recognition and Asset Classification: The draft framework outlines guidelines for Income Recognition, ....
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