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Anticipated relaxation on provision on infrastructure exposure
As per media sources, RBI is mulling to provide some relaxation in lieu of provision buffer to be created on infrastructure exposure. According to the draft, lenders were required to shore up provision on under-construction projects from current 0.4% to 5% in a phased manner in next 3 years.
However, to ensure availability of credit to infrastructure sector without any substantial impact on lenders profitability, central bank is looking to extend the time period for implementation of the requirement of higher provision.
While central bank does not envisage to alter requirement for higher credit cost, extension in implementation will provide breather to the lenders as gradual increase in coverage ratio, without any major impact on profitability, could be undertaken. In listed financial domain, PFC, REC and IREDA remains primary beneficiaries.
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