RBI slams banks to follow instructions in true letter while extending loans

  • Blog|FEMA & Banking|News|
  • |
  • < 1 minute
  • By Taxmann
  • |
  • Last Updated on 16 June, 2022

RBI; housing projects of Government-owned entities

Circular no. RBI/2022-23/71 DOR.CRE.REC.No.47/13.03.00/2022-23, Dated: 14.06.2022

The RBI has observed that banks have not been strictly complying with extant instructions on assessment of commercial viability, ascertainment of revenue streams for debt servicing obligations, and monitoring of end-use of funds w.r.t financing of infrastructure/ housing projects of Government-owned entities. Therefore, RBI has advised banks to carry out a review and place before their Boards, a comprehensive report on the status of compliance with instructions within 3 months from 14.06.2022.

RBI also found that Banks/ FIs have been violating instructions which inter alia require that in case of projects undertaken by government-owned entities, term loans should be sanctioned only for corporate bodies; due diligence should be carried out on the viability and bankability of the projects to ensure that revenue stream from the project is sufficient to take care of the debt servicing obligations; and that the repayment/ servicing of debt is not from budgetary resources. RBI reiterated that banks are required to follow these instructions in letter and spirit.

Click Here To Read The Full Circular

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

Leave a Reply

Your email address will not be published. Required fields are marked *

Everything on Tax and Corporate Laws of India

To subscribe to our weekly newsletter please log in/register on Taxmann.com

Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied