RBI (Project Finance) Directions, 2025 apply to all new project finance loans (or existing ones experiencing a Credit Event)
sanctioned on or after October 1, 2025, by banks, NBFCs, HFCs, UCBs, and AIFIs—excluding RRBs, Local Area Banks, and Payment Banks.
Key Highlights:
1. Lenders must ensure:
- Financial closure and declaration of original DCCO (Date of Commencement of Commercial Operations) before any disbursement;
- Disbursement schedule to be aligned with the project’s stage of completion in the loan agreement;
- Realistic post-DCCO repayment schedule reflecting initial cash flows of Project.
2. Minimum lender exposure:
- At least 10% if total exposure is up to ₹1,500 crore;
- 5% or ₹150 crore, whichever is higher, if total exposure exceeds ₹1,500 crore.
3. All mandatory approvals applicable till financial closure must be in place before financial closure.
4. Adequacy of land/right of way before first disbursement.
5. A Techno-Economic Viability (TEV) study is mandatory for any modification in the original DCCO when aggregate exposure exceeds ₹100 crore.
6. A loan account can remain ‘Standard’ if:
- DCCO is deferred up to 3 years (infrastructure) or 2 years (non-infra);
- Cost overrun is within 10% of the original project cost (excluding IDC) - along with other conditions ;
- Project cost rises by 25% or more due to a change in scope and size (excluding cost overrun) - along with other conditions and allowed only once in lifetime of Project.
7. Additional provisioning of 0.375% per quarter of DCCO deferment must be made over and above standard provisioning norms for standard accounts that have availed DCCO deferment.
This framework provides unified structure for project loan evaluation, enhances risk management, and facilitates early resolution of stress, thereby reinforcing credit discipline in infrastructure and project financing. This framework also promotes greater transparency among all stakeholders.
