Indian central bank rationalises provisioning for infrastructure loans
MUMBAI, June 19 (Reuters) - The Reserve Bank of India was rationalising the standard asset provisioning requirement for all under-construction projects, it said on Thursday, but these would gradually increase in case of deferment.
The standard asset provisioning requirement would stand at 1% for all projects under construction which would gradually increase for each quarter of date of commencement of operations deferment, the central bank said in a statement on its website.
The provisioning requirement for under-construction commercial real estate exposures will be slightly higher at 1.25%.
Indian banks saw large defaults across infrastructure loans starting in 2012-2013 on account of exuberant lending, which strained the country's banking system.
The Reserve Bank of India had last year proposed to lenders to set aside higher provisions for under-construction infrastructure projects and asked them to ensure strict monitoring of any emerging stress.
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