Final RBI norms on project financing positive trigger for PFC

The RBI has issued final project financing norms (effective from October 1, 2025) on the draft issued in May 2024.

- DEVANGSHU DATTA

There are some key relaxations. Lower provisioning is required for standard assets. The revised provision is 1 per cent for under construction and 0.4 per cent for operational projects (vs 5 per cent and 2.5 per cent respectively in the draft).

Additional provisions for Date of Commencement of Commercial Operations (DCCO) deferred standard assets are reduced to 0.375 per cent-0.5625 per cent per quarter vs. 2.5 per cent for cumulative deferments. Another key change is income recognition on accrual basis for DCCO deferred standard assets (versus on cash basis).

The guidelines do not apply to projects where financial closure is achieved before October 1, 2025.