New RBI guidelines 'fail to mandate' environmental, socially equitable safeguards

By Amitanshu Verma, Kavita Kabeer*
In a comprehensive and detailed response to the Reserve Bank of India's recently released Draft Prudential Framework for Income Recognition, Asset Classification, and Provisioning (IRACP-PUIMP) pertaining to Advances - Projects Under Implementation Directions 2024, civil society and community organisations, academics and social workers have highlighted several critical areas of concern and proposed significant enhancements to the framework. The draft prudential framework released by the central regulator had invited public comments till June 15, 2024.
The response emphasises the framework's inadequate examination of cost overruns and project non-performance. By not sufficiently analysing the causes of these issues, the framework misses an opportunity to create more effective resolution plans based on past learnings. This gap is particularly evident in major infrastructure and energy projects that have faced significant cost overruns and fallen into non-performing asset (NPA) status.
Another key aspect of the response is the role of commercial banks in project finance. The response recommends revisiting this involvement, emphasising that Development Finance Institutions (DFIs) are better suited to handle large-scale infrastructure projects. DFIs possess the necessary expertise and risk mitigation tools to manage the substantial risks associated with these projects, which include construction, operational, market, and political risks.

Furthermore, the current guidelines fall short in mandating robust environmental, social, and climate safeguards at the level of financial institutions. Civil society organisations (CSOs) advocate for mandatory climate risk assessments and sustainable practices to be integrated into the project finance framework. This integration is crucial for mitigating long-term environmental impacts and ensuring that financed projects do not adversely affect vulnerable communities.
The response also underscores the need for mandatory public consultations and periodic social audits to ensure transparency and community involvement in projects. These measures are essential for safeguarding the interests of local populations and ensuring equitable development.
Additionally, the CSOs propose the establishment of comprehensive oversight and redressal mechanisms within financial institutions to achieve full accountability regarding environmental, social, and climate issues.

The response underscores the need for mandatory public consultations and periodic social audits to ensure transparency in projects

A permanent body within each institution should ensure compliance with these standards throughout all project stages, from pre-approval to loan closure.

The collective submission states:

“The new prudential framework is a pivotal step towards financial stability in project finance. However, it must evolve to address the environmental, social, and governance aspects critical to sustainable development. Our recommendations aim to ensure that the framework not only safeguards financial interests but also upholds the broader public good.”
The response believes that these enhancements will significantly strengthen the framework, ensuring that project finance in India is not only economically viable but also socially equitable and environmentally sustainable.

The submission has been signed by the
Centre for Financial Accountability, New Delhi; Bharat Patel, Machimar Adhikar Sangharsh Samiti; Krishnakant, Paryavaran Suraksha Samiti; Dinesh Abrol, Professor, Institute for Studies in Industrial Development, New Delhi; Roma Malik, All India Union of Forest Working People; Dr Himanshu Upadhyaya, Assistant Professor, Azim Premji University, Bengaluru; Monica Harpalani, Independent Researcher; Raj Kumar Sinha, Bargi Bandh Visthapit Evam Parbhavit Sangh, Madhya Pradesh; Ravi Rebapraggada, Samata; Ashok Shrimali, Secretary General of Mines, minerals and People (mm&P) Alliance; Himanshu Thakkar, South Asia Network on Dams, Rivers, among others.
---
*With Centre for Financial Accountability

Comments

Mergers and privatisation: The Finance Minister’s misguided banking agenda

By Thomas Franco The Finance Minister has once again revived talk of merging two or three large public sector banks to make them globally competitive. Reports also suggest that the government is considering appointing Managing Directors in public sector banks from the private sector. Both moves would strike at the heart of India’s public banking system . Privatisation undermines the constitutional vision of social and economic justice, and such steps could lead to irreversible damage.

Political misfires in Bihar: Reasons behind the Opposition's self-inflicted defeat

By Vidya Bhushan Rawat* The Bihar Vidhansabha Election 2025 verdict is out. I maintained deliberate silence about the growing tribe of “social media” experts and their opinions. Lately, these do not fascinate me. Anyone forming an opinion solely on the basis of these “experts” lives in a fool’s paradise. I do not watch them, nor do I follow them on Twitter. I stayed away partly because I was not certain of a MahaGathbandhan victory, even though I wanted it. But my personal preference is not the issue here. The parties disappointed.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Rajiv Shah Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Celebrating 125 yr old legacy of healthcare work of missionaries

Vilas Shende, director, Mure Memorial Hospital By Moin Qazi* Central India has been one of the most fertile belts for several unique experiments undertaken by missionaries in the field of education and healthcare. The result is a network of several well-known schools, colleges and hospitals that have woven themselves into the social landscape of the region. They have also become a byword for quality and affordable services delivered to all sections of the society. These institutions are characterised by committed and compassionate staff driven by the selfless pursuit of improving the well-being of society. This is the reason why the region has nursed and nurtured so many eminent people who occupy high positions in varied fields across the country as well as beyond. One of the fruits of this legacy is a more than century old iconic hospital that nestles in the heart of Nagpur city. Named as Mure Memorial Hospital after a British warrior who lost his life in a war while defending his cou...

New RTI draft rules inspired by citizen-unfriendly, overtly bureaucratic approach

By Venkatesh Nayak* The Department of Personnel and Training , Government of India has invited comments on a new set of Draft Rules (available in English only) to implement The Right to Information Act, 2005 . The RTI Rules were last amended in 2012 after a long period of consultation with various stakeholders. The Government’s move to put the draft RTI Rules out for people’s comments and suggestions for change is a welcome continuation of the tradition of public consultation. Positive aspects of the Draft RTI Rules While 60-65% of the Draft RTI Rules repeat the content of the 2012 RTI Rules, some new aspects deserve appreciation as they clarify the manner of implementation of key provisions of the RTI Act. These are: Provisions for dealing with non-compliance of the orders and directives of the Central Information Commission (CIC) by public authorities- this was missing in the 2012 RTI Rules. Non-compliance is increasingly becoming a major problem- two of my non-compliance cases are...

N-power plant at Mithi Virdi: CRZ nod is arbitrary, without jurisdiction

By Krishnakant* A case-appeal has been filed against the order of the Ministry of Environment, Forest and Climate Change (MoEF&CC) and others granting CRZ clearance for establishment of intake and outfall facility for proposed 6000 MWe Nuclear Power Plant at Mithi Virdi, District Bhavnagar, Gujarat by Nuclear Power Corporation of India Limited (NPCIL) vide order in F 11-23 /2014-IA- III dated March 3, 2015. The case-appeal in the National Green Tribunal at Western Bench at Pune is filed by Shaktisinh Gohil, Sarpanch of Jasapara; Hajabhai Dihora of Mithi Virdi; Jagrutiben Gohil of Jasapara; Krishnakant and Rohit Prajapati activist of the Paryavaran Suraksha Samiti. The National Green Tribunal (NGT) has issued a notice to the MoEF&CC, Gujarat Pollution Control Board, Gujarat Coastal Zone Management Authority, Atomic Energy Regulatory Board and Nuclear Power Corporation of India Limited (NPCIL) and case is kept for hearing on August 20, 2015. Appeal No. 23 of 2015 (WZ) is filed, a...

Only one Indian national park rated ‘good’ by IUCN: Concerns over ecological governance

By A Representative Environmental policy expert Shankar Sharma has written to the Ministry of Environment, Forest and Climate Change (MoEF&CC) and its affiliated institutions, expressing grave concern over India’s deteriorating ecological health. Citing the International Union for Conservation of Nature (IUCN)’s latest global review, which found that only Khangchendzonga National Park received a “Good” rating among 107 national parks, Sharma warned that the findings reveal a “serious concern for the overall health of the country’s flora, fauna, and environment.”

Whither GIFT City push? Housing supply soars in Mumbai, Hyderabad, Pune, not Ahmedabad

By Rajiv Shah A new report by a firm describing itself as a "digital real estate transaction and advisory platform," Proptiger , states that the Mumbai Metropolitan Region (MMR) has been the largest contributor to housing units among India's top eight cities currently experiencing a real estate boom. Accounting for 26.9% of all new launches, it is followed by Pune with 18.7% and Hyderabad with 13.6%. These three cities collectively represented 59.2% of the new inventory introduced during the third quarter (July to September 2025), which is the focus of the report’s analysis.

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor* This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.

Search This Blog