IREDA remains resilient amid RBI’s proposed guidelines: Here’s why


New Delhi : The banking regulator Reserve Bank of india had issued draft guidelines for financial institutions. It is proposed that financial institutions giving loans to infrastructure projects will have to keep 5 percent of the loan as provisioning. However, with the launch of the project, there was a huge fall in the shares of all lending financial institutions, banking and non-banking.

It also has the government sector Indian Renewable Energy Development Agency (IREDA), which was recently given ‘Navratna’ status by the government. There was a big fall in the shares of IREDA, which gave multibagger returns, on Monday. On Tuesday also, IREDA shares fell 2.70 percent to close at Rs 167.65 on BSE. This shows that investors are still scared about the proposed guidelines of RBI.

However, IREDA says that the proposed guidelines of the central bank will not have much impact on the company. At the same time, Profit After Tax (PAT) is expected to remain almost unaffected.

The aim of the draft guidelines of RBI is to remove the loopholes due to which non-performing assets (NPAs) increase. This will increase discipline in consortium financing. Its greater impact will be on those lenders who follow the provisioning norms of RBI. Also, keep projects with long construction period in your AUM.

This will have very limited impact on IREDA, as we already follow higher provisioning and we will not face any problem in adjusting to the proposed RBI guidelines.

The RE projects that IREDA finances, such as solar and wind projects, have a shorter construction period than other infrastructure financing NBFCs.

Most of the projects in IREDA’s portfolio have already started work, so the impact of the need for additional provision is limited.

IREDA’s Profit After Tax (PAT) is expected to remain largely unaffected. At the same time, there may be a slight impact on Net Worth and Capital Adequacy Ratio (CRAR).


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