RBI proposes stricter project finance rules with higher provisioning during construction.

The Reserve Bank of India (RBI) has proposed stricter rules for project finance, including a classification of projects based on their phase and higher provisioning of up to 5% during the construction phase. This follows stress on bank books during the last credit cycle due to project loans. Under the new norms, banks must set aside 5% of their exposure during construction, which can be reduced to 2.5% and 1% as the project becomes operational and meets certain conditions.