RBI’s infra norms no cause for panic: PNB

Punjab National Bank (PNB) plans to seek clarification from the central bank on whether its draft guidelines proposing higher provisioning for infrastructure financing would be applicable for small loans as well.

“There is no need to panic,” said PNB MD and CEO Atul Kumar Goel, while presenting the bank’s results for the March quarter and the 2023-24 financial year.

“The regulator’s concern is only to see that projects see timely completion. We will like to get clarification whether the changed provisioning will be applicable to all categories of infrastructure financing projects, including structures like (infrastructure investment trusts), and whether the rules would be applicable above a certain amount and not on small loans,” Goel said.

PNB would submit its views to RBI before 15 June, he said.

The bank, which reported strong Q4 and full-year earnings on Thursday, has exposure of ₹98,400 crore to the infrastructure sector.

Banks will be seeking clarity on what portion of their infrastructure loans would be subject to the revised provisioning, Goel said.

RBI recently released draft guidelines on the ‘Prudential Framework for Income Recognition, Asset Classification and Provisioning pertaining to Advances—Projects Under Implementation’. They propose a phased 5% standard asset provision during the construction phase, rising from the present 0.4% level, which industry experts fear could substantially dry up the availability of banking finance to the infrastructure sector, as well as affect interest rates on loans.