India's new infrastructure lending rules to support loan growth moody's says
India's final rules easing provisions for loans to under-construction infrastructure projects are likely to revive credit growth in the sector, Moody's Ratings said on Monday.The Reserve Bank of India earlier this month cut the provisioning requirement to 1% from a proposed 5%, a move expected to boost banks' willingness to fund infrastructure developments, Moody's said.
‘We expect the guidelines' finalization will reduce uncertainty in project financing and support medium-term growth,’ Moody's said.
Infrastructure credit shrank 0.8% between April 2024 and April 2025 after the Reserve Bank of India proposed tighter lending norms last May, Moody's said, adding that lending by non-bank infrastructure financiers also lagged, growing at an annualised 6.9% between March and September 2024, versus 13.2% for the broader NBFC sector.
Prolonged project delays and overly optimistic revenue forecasts have triggered major loan defaults in India, leaving lenders cautious on infrastructure lending. The new rules take effect from Oct. 1.
The ratings agency said state-owned banks and non-bank lenders, most exposed to the infrastructure sector, would see a ‘slight negative impact’ on profitability for loans that are not disbursed by October 1, although that would likely be a ‘one-off effect.’
Additional steps such as extended deadlines for project completion and commercial operations will help support asset quality in the sector, Moody's said.
Prices of onions pulses cotton hit 3 year low
Sep 29, 2025
Domestic coke makers flag import misuse
Sep 22, 2025
Stay updated with The Hindu Editorial Vocab24 app, your definitive source for breaking news and comprehensive coverage from India and around the globe. Whether it's political developments, business updates, sports highlights, the latest technology trends, or current events, The Hindu brings live, accurate, and reliable news directly to your device.
Don’t fall for sensationalized or fake news shared online. Read and share accurate updates with friends and family through The Hindu Editorial Vocab24 app. Download it today!
News Coverage in The Hindu Editorial Vocab24 App
Breaking News: Receive instant notifications on breaking news stories as they unfold. Stay informed about major events and developments in India and around the world with live blogs, news in shorts videos, and concise articles.
Politics: Get the latest updates on Indian politics, including elections, policy changes, government decisions, and political events that shape the nation.
Business and Economy: Stay ahead in the economic landscape with detailed business news and market analysis. Learn about stock market trends, financial reports, corporate news, and economic developments to make informed investment decisions.
Current Events: Follow stories on social issues, policy changes, global events, and daily current affairs, tailored for UPSC and other competitive exam preparations.
Technology: Keep up with the latest gadgets, innovations, and tech trends. Read expert reviews and analyses in short, concise updates on cutting-edge technology from India and beyond.
Sports: Never miss a moment of your favorite sports. Get live scores, match reports, and expert analysis on cricket, football, tennis, and more.
International News: Stay informed about global events and geopolitical developments, including the Russia-Ukraine war, Israel-Palestine conflict, and other key international stories.
Local News: Stay connected to your community with the latest updates on city events, issues, and local news. Coverage includes hyperlocal updates from cities like Bangalore, Chennai, Delhi, Hyderabad, Mumbai, Kolkata, and more.
Trending Topics: Discover what's trending today with the most talked-about stories and hot topics across India and the world.
Experience journalism that values integrity, accuracy, and reliability. Download The Hindu Editorial Vocab24 app today and stay connected with the world.
Subscribe to our newsletter!
