Easier norms for loans taken for projects

MONETARY POLICY 2008-09/ POLICY AND BUSINESS

Taking note of the usual delays an infrastructure project is exposed to, the RBI has relaxed the norm for classifying an infrastructure project as a sub-standard asset by banks to two years from date of completion, from one year earlier.

If industrial projects financed by banks are delayed beyond six months from the targeted date of production, banks classify them as a sub-standard asset.

For infrastructure projects, the period for recognising them as a sub-standard asset was extended to one year from March 31, 2007. The RBI has further relaxed this norm to two years for infrastructure projects.