RBI Revamps Project Finance Guidelines RBI has introduced new guidelines to ease the provisioning burden on banks and NBFCs. Under the previous rules, loans for under-construction projects mandated a 5% provisioning requirement. The revised norms lower this to 1%, though commercial real estate during construction may attract around 1.25%. By clearly categorizing projects into design, construction, and operational phases, the RBI tailors provisioning more appropriately. Effective from October 1, 2025, these changes follow extensive consultations with roughly 70 stakeholders—including banks, NBFCs, industry bodies, and government representatives. While extra provisions will be required during delay periods once commercial operations begin, the overall shift aims to balance risk management with maintaining robust credit availability. Analysts believe that by reducing the capital set aside for provisions, banks can reallocate funds to support added lending. This move is expected to stimulate infrastructure growth and create a more stable environment for project finance, benefiting both the real estate and infrastructure sectors in India.

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