Deciding two connected writ petitions arising from a common Industrial Tribunal Award, the Delhi High Court set aside the Tribunal's direction granting hotel workmen a further…
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06/09/20264 min read
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Implications Of Draft Prudential Framework For Income Recognition, Asset Classification And Provisioning Pertaining To Advances Issued By The RBI On HAM Projects
RBI
The RBI's draft prudential framework released on May 3, 2024, proposing stringent provisions for project loans has sparked widespread concern across various sectors.
Particularly impactful are the implications for Hybrid-Annuity Model (HAM) projects, where provisions could increase sharply from 0.4% to 5% of funded outstandings unless specific operational conditions are met. These include positive net operating cash flow and a significant reduction in long-term debt.
The proposed changes also suggest stricter conditions on land availability and project timelines, potentially delaying financial closures. HAM projects, known for their stable cash flows compared to PPP models, face challenges in aligning cash flows with the new amortization schedules.
While InVITs might see a silver lining with potential exclusions, industry stakeholders are skeptical about the overall impact and urge RBI to reconsider the guidelines in light of industry feedback.
