What changed
RBI issued a circular extending its prudential norms on income recognition, asset classification, and provisioning for advances related to projects under implementation to select AIFIs. These norms, originally applicable to banks via a March 2010 circular, now apply mutatis mutandis to Exim Bank, NABARD, NHB, and SIDBI.
What it means for you
AIFIs must align their project loan classification and provisioning practices with bank-level standards, potentially tightening recognition of stressed projects. This ensures uniformity in prudential treatment across lenders, impacting how these institutions report asset quality and set aside provisions for under-implementation projects.
What you must do
- Review the referenced bank circular (DBOD.No.BP.BC.85/21.01.048/2009-10) for detailed norms on project loans.
- Update internal policies for income recognition, asset classification, and provisioning for projects under implementation to match bank guidelines.
- Train credit and risk teams on the new classification triggers for under-implementation projects.
- Ensure compliance reporting systems capture project loan data as per the extended norms.
Who it affects
Exim Bank, NABARD, NHB, SIDBI, All-India Financial Institutions (AIFIs)
Which institutions are covered by this circular?
The circular applies to select All-India Term-lending and Refinancing Institutions: Exim Bank, NABARD, NHB, and SIDBI.
What is the effective date of these norms?
The norms are effective from the date of the circular, April 7, 2010, referencing the bank circular dated March 31, 2010.
Do these norms change anything for banks?
No, banks were already subject to the original circular. This extension only brings AIFIs under the same framework.