General Studies · RBI Infrastructure Financing Guidelines
A Special Purpose Vehicle executing a waste management project faces a 18-month delay due to a judicial stay, leading to cost overruns and interest during construction escalation. According to RBI guidelines on infrastructure project loans, how should a bank handle the cost overrun and Date of Commencement of Commercial Operations (DCCO)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank should immediately classify the account as an NPA because construction was stalled for more than 12 months.
- 2The bank can provide additional funding for the cost overrun and extend the DCCO by up to 2 years for infrastructure projects without it being treated as restructuring.✓
- 3The bank must insist that the developer brings in 100% of the cost overrun as equity.
- 4The bank should convert the loan into a personal loan for the directors.
Correct answer
The bank can provide additional funding for the cost overrun and extend the DCCO by up to 2 years for infrastructure projects without it being treated as restructuring.
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