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RBI/2022-23/71 DOR.CRE.REC.No.47/13.03.00/2022-23 June 14, 2022 All Scheduled Commercial Banks (Excluding RRBs) Madam / Dear Sir Bank finance to Government owned entities Please refer to the Master Circulars DBR.No.Dir.BC.10/13.03.00/2015-16 dated July 1, 2015 on Loans and Advances Statutory and Other Restrictions and DOR.CRE.REC.No.06/08.12.001/2022-23 dated April 1, 2022 on Housing Finance. 2. We have come across instances where banks have not been strictly complying with
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FAQ :
The RBI has asked banks to review their financing of government-owned entities and report on compliance with existing instructions.
The RBI has observed instances where banks have not strictly complied with instructions on assessing commercial viability, revenue streams for debt servicing, and monitoring end-use of funds for government entity projects.
Banks have reportedly violated instructions requiring term loans for government-owned entities to be sanctioned only for corporate bodies, proper due diligence on project viability, and ensuring repayment is not from budgetary resources.
Banks are required to submit a comprehensive report on their compliance status to their Boards within three months from the date of the circular.
The RBI's concerns specifically mention infrastructure and housing projects undertaken by government-owned entities.
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