The Reserve Bank of India (RBI) has released its final guidelines on project finance provisioning, significantly easing earlier proposals and offering relief to banks and NBFCs. Effective October 1, 2025, lenders must maintain a general provision of 1.25% for under-construction commercial real estate (CRE) projects and 1% for CRE-residential housing (CRE-RH) and other project loans during the construction phase.
🏗️ Key Highlights of RBI’s Project Finance Directions, 2025
- Provisioning during construction phase:
- 1.25% for CRE
- 1% for CRE-RH and other projects
- Post-operational phase provisioning:
- 1% for CRE
- 0.75% for CRE-RH
- 0.40% for other project loans
- DCCO (Date of Commencement of Commercial Operations) delays:
- Additional provisioning of 0.375% per quarter for infrastructure projects
- 0.5625% per quarter for non-infra projects
- Monitoring & Reporting:
- Banks must track project stress during construction and report credit events to CRILC weekly
- A 30-day review period is mandated after any credit event
🧾 Relief from Draft Norms
The final norms are a major relaxation from the 5% provisioning proposed in the 2024 draft guidelines. The RBI has adopted a principle-based, harmonized framework across regulated entities, incorporating feedback from over 70 stakeholders.
🏦 Impact on Lenders
Experts say the revised norms strike a balance between risk mitigation and credit flow, especially for infrastructure and real estate sectors. Projects that achieved financial closure before October 1, 2025, will continue under existing norms, ensuring a smooth transition.
Stay tuned for updates on implementation and sectoral impact.
