RBI must review plan to raise provisions against infra loans: Lobby group

The Finance Industry Development Council (FIDC), representing NBFCs, urged the RBI to review its proposal of increasing provisions for infrastructure project loans. The RBI's plan to raise provisions from 0.4% to 5% during construction was opposed by FIDC without specifying reasons. \r

FIDC suggested maintaining the current provision level unless project delays occur, advocating for improved project selection. The proposed rules may increase interest rates by 1-1.5 percentage points, as reported. FIDC also disagreed with the RBI's proposal for minimum lending limits, preferring commercial agreements. \r

Additionally, they sought clarification on the applicability of the draft framework to pre-existing loans without common agreements. The Indian Banks Association is expected to oppose the higher provisions as well.