Brief Overview:
Restructuring of exposures relating to projects under implementation on account of change in date of commencement of commercial operations (DCCO) was previously excluded from the ambit of the Prudential Framework for Resolution of Stressed Assets issued on 7th June 2019. Now, a framework for financing of projects in infrastructure and non-infrastructure (including commercial real estate & commercial real estate- residential housing) sectors by Commercial Banks, NBFCs (including HFCs), Primary (Urban) Cooperative Banks, and All India Financial Institutions (“REs”) has been issued by the Reserve Bank of India.
Amongst other things, the Reserve Bank of India has stipulated the revised regulatory treatment upon change in the DCCO of projects.
Technical Details:
The Reserve Bank of India has issued the ‘Reserve Bank of India (Project Finance) Directions, 2025’ (“RBI Directions”). The RBI Directions, inter alia entail the following:
1) Adoption of a principle-based regime for resolution of stress in project finance exposures, harmonised across REs.
2) Rationalization of permissible DCCO extensions with an overall ceiling of 3 (three) and 2 (two) years for infrastructure and non-infrastructure sector.
3) Flexibility to REs in extending the DCCO within the above ceilings, based on their commercial assessments.
4) Rationalisation of standard asset provisioning requirement to 1% for projects under construction, which shall gradually increase for each quarter of DCCO deferment. The requirements for under construction CRE exposures will be higher at 1.25%.
5) Under construction projects where financial closure has already been achieved shall continue to be guided by the extant provisioning norms to facilitate a seamless implementation.
6) During operational phase, the standard asset provisioning requirement shall stand reduced to 1% for CRE, 0.75% for CRE-RH and 0.40% for other project exposures, respectively.
The RBI Directions shall come into force with effect from 1st October 2025.
For further details, please see:
Reserve Bank of India – Notifications
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