IBA to ask RBI to not alter capital requirement for infra projects: Report

The Indian Banks' Association (IBA) will urge the central bank to maintain current provisioning levels for infrastructure projects, in response to the proposed increase, sources revealed. The Reserve Bank of India (RBI) suggested raising the provision from 0.4% to 5% for under-construction projects, a move criticized for potentially inflating project costs and hindering financing. \r

Asset quality concerns remain moderate, making harsh provisioning rules seem imprudent, stated banking sources. Girishkumar Kadam of ICRA anticipated a modest impact if the proposal is enforced, estimating increased provision costs and a 30-40 basis point rise in borrower's capital costs.\r

IBA aims to formally request the RBI before the June 15 deadline, considering feedback from banks.