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Mint
a day ago
- Business
- Mint
PFC, HUDCO, IREDA, REC shares surge
New Delhi, Shares of financial institutions such as PFC and HUDCO surged on Friday after the Reserve Bank issued norms to provide a harmonised framework for financing of projects in infrastructure and non-infrastructure sectors by banks, NBFCs and other regulated entities. The stock of Power Finance Corporation surged 4.92 per cent, HUDCO soared 4.72 per cent, Indian Renewable Energy Development Agency jumped 4.03 per cent, REC rallied 2.96 per cent and Indian Railway Finance Corporation climbed 1.47 per cent on the BSE. "The rally was broad-based, with all sectoral indices ending in the green, led by financials after the RBI eased provisioning norms for project... effective October 2025. This is particularly positive for power financiers like PFC and REC, due to their large exposure to power sector projects," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said. The Reserve Bank of India Directions, 2025 lay down the revised regulatory treatment upon change in the 'date of commencement of commercial operations' of such projects in the backdrop of a review of the extant instructions and analysis of the risks inherent in such financing. The RBI said the directions entail the adoption of a principle-based regime for resolution of stress in project finance exposures, harmonised across regulated entities . "In under-construction projects where the aggregate exposure of the lenders is up to ₹ 1,500 crore, no individual lender shall have an exposure which is less than 10 per cent of the aggregate exposure," the RBI said. For projects where aggregate exposure of all lenders is more than ₹ 1,500 crore, the exposure floor for an individual lender shall be 5 per cent or ₹ 150 crore, whichever is higher. Further, a lender shall ensure that all applicable approvals/clearances for implementing/constructing the project are obtained before financial closure. The Reserve Bank of India Directions, 2025 shall come into force with effect from October 1, 2025, the central bank said. "Final guidelines on project finance comes as a relief to the lenders..." A M Karthik, Senior Vice President & Co-Group Head, Financial Sector Ratings, ICRA Ltd, said on the RBI guidelines on project loans. This article was generated from an automated news agency feed without modifications to text.
Time of India
06-06-2025
- Business
- Time of India
RBI lowers qualifying asset criteria for NBFC-MFIs to 60% from 75%
The Reserve Bank of India ( RBI ) Friday lowered the minimum amount of eligible microfinance loans specialized lenders must hold on their books, allowing microfinance-NBFCs to further diversify their asset base. In a notification Friday, the central bank said qualifying assets (those meeting the definition of microfinance loans) of NBFC-MFIs must constitute a minimum of 60% of the total assets (netted off by intangible assets), on an ongoing basis. The earlier threshold was 75%. 'If an NBFC-MFI fails to maintain the qualifying assets as aforesaid for four consecutive quarters, it shall approach the Reserve Bank with a remediation plan for taking a view in the matter,' the RBI said. The central bank also said that 'qualifying assets' of NBFC-MFIs has been aligned with the definition of 'microfinance loans'. As per RBI rules, microfinance loan is defined as a collateral-free loan given to a household having annual household income up to Rs 3,00,000. 'This policy shift will enable accelerated diversification within our operations, ensuring balance sheet stability and positioning us for robust cross-cycle earnings,' said Ganesh Narayanan, Chief Executive Officer, CreditAccess Grameen Ltd . Reduction in the qualifying asset criteria for NBFC-MFIs is expected to improve loan diversification of lenders, thereby augmenting their credit risk profile . It will also enable them to meet other credit requirements of their end borrowers, according to A M Karthik, Senior Vice President & Co-Group Head, Financial Sector Ratings, ICRA .
