Good news for REC, PFC, Ireda. The RBI has given great relief regarding the under construction project financeing rules. Currently these rules have been postponed. Let us understand what was the Dop Guidelines of ECL i.e. Expected Credit Loss and who will benefit from its postpone.
RBI’s surprise decision has come on ECL. Under construction project financeing rules have been postponed. Project Financing Rules will not be applicable at the moment. ECL i.e. Expected Credit Loss, under which the estimated deficit was to be provided. Along with the LCR rule, ECL has also been postponed. Now the provisions of ECL will not be implemented before 31 March 2026.
Why was the market scared of ECL provisions?
The ECL provisions were guidelines for the construction project in the provisions. It was proposed to increase provisioning under ECL. Provisioning for the estimated deficit was to be increased from 0.4 per cent to 5 fastening. REC and PFC declined drastically after draft guidelines. REC, PFC and Ireda will benefit the most from ECL kettle. This will remove uncertainty. The sentiments will improve. Not much provisioning will have to be done. Less provisioning for Infra and Renewable Project will have to be done. Less provisioning means now these companies will be able to give more loans. This decision of RBI has possible to re-paint PSU financial shares.
Cabinet Meeting: Approval of Cabinet’s important meeting, new income tax bill and insurance act amendment bill this evening possible
After the policy today, the RBI Governor said in the press conference that he will meet sufficient needs of liquidity. Keep taking appropriate steps for liquidity. Will adopt a pro-active method for liquidity. There will be focus on problems related to liquidity. Macro-Economic Models will continue to be an active attitude towards liquidity. It is necessary to get both price stability and growth. It is important to remain supportive for growth when inflation decreases. LCR (liquidity coverage ratio) rules will not be applicable before 31 March 2026. LCR will give enough time to apply guidelines. No bottlenecks will come for growth. Will increase the pace of the economy smoothly.