Finance

What RBI proposal for tighter project finance rules will mean for REC, PFC?

Published

2 years ago

May 6, 2024

What RBI proposal for tighter project finance rules will mean for REC, PFC?

Anil Gupta, Sr VP & Co-Group Head-Financial Sector Ratings, ICRA, in conversation with ET Now on RBI proposal for tighter project finance rules. Gupta says “given the market reaction, there could be a case where maybe more clarification will emerge as to whether 5% provision requirement is on the entire under-construction portfolio of the lenders or not. Our reading is that it is only for the cases where the project is under construction and has sought a DCCO extension. If that clarification comes, it should not be really negative for the sector because it is only a positive from the balance sheet perspective of the lenders that you are taking care of the risk which has gone up because of DCCO extension. It should not be negative for the credit flow.

Seeing the implication of the RBI proposal for tighter project finance rules play out on the likes of an REC and PFC, gives us a sense of the negative implication for such
Anil Gupta: Basically, the regulation which has come out is harmonising the guidelines which were there for banks and NBFCs earlier. For example, today if a project defers its DCCO and that deferment is within a period of two years, the standard asset provisioning norm for a bank is 0.4% and for an NBFC it is 0.25%. Now what this circular is saying is that even if there is a deferment of DCCO within a period of two years, because there have been some deterioration in the project fundamentals, the standard asset provisioning should increase to 5%. So, this 5% provisioning requirement, which is specified with this circular, in our view is applicable only for the projects which are taking a DCCO extension and not for all the projects which are under construction. Now, if this deferment is beyond the two-year period, let us say for an infra project, the earlier guidelines required a provisioning to increase to 5%. The new guidelines which they are proposing says that if the deferment is beyond two years, then additional 2.5% over and above the 5%, which it is currently specifying, will kick in.

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So, total provisioning requirement for cases or projects which are deferring DCCO by more than two years, will be 7.5%. While this is good from the strengthening of the balance sheets for the banks, because any project, let us say, which is undergoing a DCCO extension has undergone a change in the risk. So, the increased provisioning requirement, even if the DCCO extension is up to two years, is a positive thing and that is a good thing. Another positive which we are seeing in the circular is that as per our understanding, the 5% provisioning which was there in the earlier guidelines for the projects who have taken a DCCO extension beyond two years, now the current guidelines allow that reduction in the provisioning from 5% to 2.5% and to 1% if the project commences the COD and also repays the debt to the extent of 20%. So, that way, it will be positive if the project is able to demonstrate the repayment to the extent of 20% of the debt at the time of DCCO extension, then the lenders will be able to release the provision also from 5% to 1%. So that way, we believe that it is positive for the bank’s riskiness; if there is a DCCO extension, then you increase the provision that will also force the lenders as well as the borrowers to possibly fix up a DCCO which is more realistic and you do not take a leeway in terms of a DCCO extension which is available let us say up to two years without additional provision.

So, you will fix up a more realistic DCCOs, more mindful in terms of setting out a repayment schedule which will align with your cash flows so that you do not have to avail a DCCO extension even though the project is complete but is not generating good enough revenues to service the debt. Overall, it is a good thing from the balance sheet strengthening as well as provision release once the project is operational and repays the debt.

PFC and REC are well capitalised. Do you sense that it may not lead to any damage on their profits and losses because their balance sheet is well capitalised?
Anil Gupta: I will not comment on the stock specific things but in general, it is applicable only for the projects which are availing DCCO extension. So, one, that the DCCO portfolio for the banks will not be very high or the lenders will not be very high; we are not talking about entire under construction portfolio of the lenders, we are talking only on the portfolio which would have availed DCCO extension and we should be mindful of that in the last few years if we leave aside maybe the thermal power or the roads which have been a long gestation projects and are more prone to DCCO extension, the recent expansions have largely been in the renewable energy space or let us say projects which are less prone to maybe DCCO extension.

But lenders and the borrowers have to be mindful of setting up DCCO because in the current set of rules being proposed, DCCO deferment will kick in a higher provisioning requirement.Down the line, could this regulation lead to lower loan growth?
Anil Gupta: No. First given the market reaction, there could be a case where maybe more clarification can emerge as to whether 5% provision requirement is on the entire under-construction portfolio of the lenders because our reading is that it is only for the cases where the project is under construction and has sought a DCCO extension.

So, if that clarification comes, it should not be really negative for the sector because it is only a positive from the balance sheet perspective of the lenders that you are taking care of the risk which has gone up because of DCCO extension. So, per se, if that clarification comes, it should not be any negative for the credit flow for the sector.

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Finance

Cornell Administrator Warren Petrofsky Named FAS Finance Dean | News | The Harvard Crimson

Published

30 minutes ago

February 28, 2026

Press Room

Cornell Administrator Warren Petrofsky Named FAS Finance Dean | News | The Harvard Crimson

Cornell University administrator Warren Petrofsky will serve as the Faculty of Arts and Sciences’ new dean of administration and finance, charged with spearheading efforts to shore up the school’s finances as it faces a hefty budget deficit.

Petrofsky’s appointment, announced in a Friday email from FAS Dean Hopi E. Hoekstra to FAS affiliates, will begin April 20 — nearly a year after former FAS dean of administration and finance Scott A. Jordan stepped down. Petrofsky will replace interim dean Mary Ann Bradley, who helped shape the early stages of FAS cost-cutting initiatives.

Petrofsky currently serves as associate dean of administration at Cornell University’s College of Arts and Sciences.

As dean, he oversaw a budget cut of nearly $11 million to the institution’s College of Arts and Sciences after the federal government slashed at least $250 million in stop-work orders and frozen grants, according to the Cornell Daily Sun.

He also serves on a work group established in November 2025 to streamline the school’s administrative systems.

Earlier, at the University of Pennsylvania, Petrofsky managed capital initiatives and organizational redesigns in a number of administrative roles.

Petrofsky is poised to lead similar efforts at the FAS, which relaunched its Resources Committee in spring 2025 and created a committee to consolidate staff positions amid massive federal funding cuts.

As part of its planning process, the committee has quietly brought on external help. Over several months, consultants from McKinsey & Company have been interviewing dozens of administrators and staff across the FAS.

Petrofsky will also likely have a hand in other cost-cutting measures across the FAS, which is facing a $365 million budget deficit. The school has already announced it will keep spending flat for the 2026 fiscal year, and it has dramatically reduced Ph.D. admissions.

In her email, Hoekstra praised Petrofsky’s performance across his career.

“Warren has emphasized transparency, clarity in communication, and investment in staff development,” she wrote. “He approaches change with steadiness and purpose, and with deep respect for the mission that unites our faculty, researchers, staff, and students. I am confident that he will be a strong partner to me and to our community.”

—Staff writer Amann S. Mahajan can be reached at [email protected] and on Signal at amannsm.38. Follow her on X @amannmahajan.

Finance

Where in California are people feeling the most financial distress?

Published

13 hours ago

February 27, 2026

Press Room

Where in California are people feeling the most financial distress?

Inland California’s relative affordability cannot always relieve financial stress.

My spreadsheet reviewed a WalletHub ranking of financial distress for the residents of 100 U.S. cities, including 17 in California. The analysis compared local credit scores, late bill payments, bankruptcy filings and online searches for debt or loans to quantify where individuals had the largest money challenges.

When California cities were divided into three geographic regions – Southern California, the Bay Area, and anything inland – the most challenges were often found far from the coast.

The average national ranking of the six inland cities was 39th worst for distress, the most troubled grade among the state’s slices.

Bakersfield received the inland region’s worst score, ranking No. 24 highest nationally for financial distress. That was followed by Sacramento (30th), San Bernardino (39th), Stockton (43rd), Fresno (45th), and Riverside (52nd).

Southern California’s seven cities overall fared better, with an average national ranking of 56th largest financial problems.

However, Los Angeles had the state’s ugliest grade, ranking fifth-worst nationally for monetary distress. Then came San Diego at 22nd-worst, then Long Beach (48th), Irvine (70th), Anaheim (71st), Santa Ana (85th), and Chula Vista (89th).

Monetary challenges were limited in the Bay Area. Its four cities average rank was 69th worst nationally.

San Jose had the region’s most distressed finances, with a No. 50 worst ranking. That was followed by Oakland (69th), San Francisco (72nd), and Fremont (83rd).

The results remind us that inland California’s affordability – it’s home to the state’s cheapest housing, for example – doesn’t fully compensate for wages that typically decline the farther one works from the Pacific Ocean.

A peek inside the scorecard’s grades shows where trouble exists within California.

Credit scores were the lowest inland, with little difference elsewhere. Late payments were also more common inland. Tardy bills were most difficult to find in Northern California.

Bankruptcy problems also were bubbling inland, but grew the slowest in Southern California. And worrisome online searches were more frequent inland, while varying only slightly closer to the Pacific.

Note: Across the state’s 17 cities in the study, the No. 53 average rank is a middle-of-the-pack grade on the 100-city national scale for monetary woes.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Finance

Why Chime Financial Stock Surged Nearly 14% Higher Today | The Motley Fool

Published

1 day ago

February 26, 2026

Press Room

Why Chime Financial Stock Surged Nearly 14% Higher Today | The Motley Fool

The up-and-coming fintech scored a pair of fourth-quarter beats.

Diversified fintech Chime Financial (CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.

Sweet music

Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.

Image source: Getty Images.

Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.

On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.

In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”

Today’s Change

(12.88%) $2.72

Current Price

$23.83

Key Data Points

Market Cap

$7.9B

Day’s Range

$22.30 – $24.63

52wk Range

$16.17 – $44.94

Volume

562K

Avg Vol

3.3M

Gross Margin

86.34%

Double-digit growth expected

Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.

It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.