What changed
The government added two new sub-sectors to the Harmonised Master List of Infrastructure sub-sectors: hotels with project cost over Rs 200 crore (any star rating, any location) and convention centres with project cost over Rs 300 crore. RBI updated its definition of infrastructure lending to include these sub-sectors, effective from November 25, 2013, with conditions like excluding land cost and a three-year window for eligible projects.
What it means for you
Banks can now classify loans for large hotels and convention centres as infrastructure lending, which may attract preferential treatment like lower risk weights or priority sector benefits. This expands the scope of infrastructure finance, potentially boosting credit flow to hospitality and event infrastructure. However, the Rs 200 crore and Rs 300 crore thresholds mean only large-scale projects qualify, and land costs are excluded from eligible project costs.
What you must do
- Update internal lending policies to include hotels (project cost > Rs 200 crore) and convention centres (> Rs 300 crore) as infrastructure sub-sectors.
- Ensure loan classification as 'infrastructure lending' only for projects meeting the cost thresholds and excluding land/lease costs.
- Track the three-year window from circular date (Nov 25, 2013) for new projects to qualify under this definition.
- Review existing hospitality sector exposures to identify any that may now qualify as infrastructure lending.
Who it affects
All scheduled commercial banks (excluding RRBs), All India term-lending and refinancing institutions (EXIM Bank, NABARD, NHB, SIDBI), Borrowers in hospitality and convention centre sectors
What are the new sub-sectors added to infrastructure lending?
Hotels with project cost over Rs 200 crore each (any star rating, any location in India) and convention centres with project cost over Rs 300 crore each.
Are there any conditions for these new sub-sectors?
Yes, eligible costs exclude land and lease charges but include interest during construction. The classification applies prospectively from the circular date (Nov 25, 2013) and is available for eligible projects for a period of three years.
Does this change affect existing loans?
No, the new sub-sectors apply with prospective effect from the circular date, so only new projects or expansions meeting the criteria after that date qualify.