(An Autonomous Apex Institute Established by RBI & Banks)
(An Autonomous Apex Institute Established by RBI & Banks)
Paper Number :WP43/2024
Publication Date :May 22, 2024
On May 3, 2024, the Reserve Bank of India (RBI) issued draft directions for income recognition, asset classification and provisioning (IRACP) pertaining to advances towards projects under implementation (RBI, 2024). These are applicable for all regulated entities in the financial sector in the business of project finance for large and capital intensive commercial and infrastructure projects, including commercial real estate. On becoming effective, these rules will have major operational and financial implications for banks and financial institutions. Our policy paper explains and critically evaluates the proposed norms. We also try to approximate their financial impact on commercial banks.