Indian banks to ask regulator to not raise provisioning for infra loans

The Indian Banks' Association (IBA) will request the Reserve Bank of India (RBI) to maintain current provisioning levels for infrastructure project loans. The RBI recently proposed increasing provisioning from 0.4% to 5% during the construction phase. IBA argues this hike would raise project costs and hurt financing. \r

They suggest additional provisioning only if project completion is delayed. With infrastructure projects resurging to boost the economy and current asset quality not alarming, the IBA deems the proposed rules too stringent. The Finance Industry Development Council (FIDC) also opposes the increase. \r

IBA plans to formally request the RBI to exempt existing loans from these new norms before the June 15 deadline.