RBI Final IRACP Norms for Project Finance Loans
Why in the news
RBI finalised provisioning rules that follow a project’s life cycle.
Key facts
- IRACP covers scheduled commercial banks and all NBFCs, including IFCs.
- Delay in DCCO brings staggered provisioning, rising each quarter.
| Stage | Exposure | Provision |
|---|---|---|
| Construction | Standard | 1% |
| Construction | CRE | 1.25% |
| Operational | CRE | 1% |
| Operational | CRE-RH | 0.75% |
| Operational | Others | 0.40% |
Objective
Risk-based provisioning, disciplined classification and prudent project finance, reducing systemic risk.
Exam angle
- Regulator: RBI; applies to banks and NBFCs.
- Abbreviations: IRACP, DCCO, CRE, CRE-RH.