Economics · Project Finance and Infrastructure Lending
In project finance and infrastructure lending, regulatory attention often extends beyond sanction to issues such as asset classification, escrow discipline, refinancing, and monitoring of stressed exposures. This is mainly because:
- 1infrastructure assets never face repayment uncertainty once commissioned
- 2project loans are outside the prudential perimeter of regulated finance
- 3project finance is funded mainly through retail deposits with no maturity mismatch
- 4long-gestation projects require careful prudential treatment due to high exposure size, delayed cash-flow build-up, and restructuring risks✓
Correct answer
long-gestation projects require careful prudential treatment due to high exposure size, delayed cash-flow build-up, and restructuring risks
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