The Reserve Bank of India (RBI) has relaxed the provisioning norms for bank advances extended to infrastructure projects. Bank-financed infrastructure projects will be treated as substandard if commercial production commences one year after the date of completion. | |
| Earlier the asset was treated as substandard if commercial production commenced six months after the date of completion of the project. |
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| The RBI move is important in the light of huge fund requirement by power, airport, road and such projects including special economic zones (SEZs). Commercial banks "� both private and public sector "� are financing SEZ projects across the country. |
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| "The move will help prevent the account from becoming a bad asset as it has big implications in terms of making provisions and erosion in capital adequacy,'' said a senior Bank of India official. |
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| "Infrastructure projects require heavy fund outlays with long gestation periods due to many inherent factors such as statutory and regulatory clearances, land acquisition, resettlement/ rehabilitation of displaced people, among others," RBI said. |
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| The government has envisaged an investment of around $350 billion for infrastructure projects in the 11th Five Year Plan. |
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