The Reserve Bank of India’s (RBI) final guidelines on project finance, released on 19 June 2025 and effective from 1 October 2025, are set to significantly ease credit costs and strengthen the risk management framework for lenders. These directions, applicable across banks, NBFCs, HFCs, and cooperative banks, replace the stricter draft guidelines issued in 2024.
According to Crisil Ratings, the new directions strike a balance between financial discipline and credit flow flexibility, helping banks support India’s capital expenditure outlay of ₹125–135 lakh crore over FY26–30.
📉 Key Relief Measures in Final Directions (vs Draft 2024)
| Provision Area | Draft Guidelines (2024) | Final Directions (2025) |
|---|---|---|
| Base Provisioning (under-construction projects) | Up to 5–7.5% | 1% (1.25% for CRE) |
| Provisioning (operational projects) | 1–2.5% | 0.4–1.0% (aligned to current norms) |
| Moratorium Post DCCO | Max 6 months | No fixed cap |
| Application | Retrospective | Prospective |
| DCCO Deferment (infra projects) | Not defined | Capped at 3 years |
“Compared with the 2024 draft, these final directions reduce provisioning burdens and improve ease of doing business for lenders,” said Subha Sri Narayanan, Director, Crisil Ratings.
🛡️ Strengthened Guardrails for Safer Lending
In addition to reducing provisioning costs, the guidelines introduce new risk management norms:
- Limit on number of lenders and exposure per lender in consortiums to promote accountability
- Step-up provisioning based on the number of quarters for which DCCO (Date of Commencement of Commercial Operations) is extended
- Stricter norms on cumulative DCCO deferment (Infra: 3 years, Non-infra: 2 years)
- Land availability/right of way checks as a condition for disbursement
“These provisions encourage earlier recognition of stress and more proactive resolution strategies,” Crisil noted.
💬 Expert Insights
“These directions will provide a growth fillip, with many lenders waiting for clarity. The lower provisioning and prospective implementation ease the burden significantly,” said Sonica Gupta, Associate Director, Crisil Ratings.
“Even with higher provisions for under-construction assets, the impact on interest rates will be marginal due to strong profitability and capital buffers of lenders.”
📌 Summary Box: Why These Guidelines Matter
- 📉 Lower credit provisioning = lower lending costs
- ⏳ Only new loans impacted (prospective application)
- 🧮 Better alignment between project risks and capital buffers
- 🏗️ Supports India’s ₹125 lakh crore infra pipeline (FY26–30)
Also Read: RBI Keeps Repo Rate Unchanged
