Banks are considering requesting special provisions for micro, small, and medium enterprises (MSMEs) under the Reserve Bank of India’s (RBI) draft rules for infrastructure project financing. In order to safeguard the interests of MSMEs, who may not be major players in the infrastructure sector but are numerous, banks are planning to write to the RBI and the finance ministry to exempt loans given to MSMEs from the proposed rules. This exemption is sought to ensure that MSMEs, which play a significant role in borrowing for infrastructure projects, have access to cheaper loans. The RBI’s proposed rules aim to protect lenders from risks associated with infrastructure projects, such as cost overruns resulting from construction delays.
The Reserve Bank of India (RBI) aims to revamp regulations on project lending to facilitate the unrestricted flow of funds to the infrastructure sector and minimize risks. According to sources, the Indian Banks Association, a Mumbai-based representative body of Indian banks and financial institutions, is expected to communicate the banks’ response to the RBI’s draft regulations. Additionally, individual banks may provide their own feedback on the proposed changes. An anonymous source stated that there is a proposal among banks to reach out to the regulator and finance ministry, urging them to create special provisions for small industries and MSMEs in light of the RBI’s plans to overhaul project lending regulations for the infrastructure sector.