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MUMBAI, March 3

THE Reserve Bank of India has told banks that they can now recognise income on accrual basis in respect of the three categories of projects under implementation, which are classified as `standard'.

Last year, RBI had informed banks that projects under implementation would be grouped under three categories for determining the date when the project ought to be completed and the manner in which the asset classification of the underlying loan should be determined.

However, at that time banks were advised that they should not recognise income on accrual basis in respect of these projects, said a press release.

Banks can now recognise income on accrual basis under the following categories.

The projects where financial closure had been achieved and formally documented may be treated as standard asset for a period not exceeding two years beyond the date of completion of the project as originally envisaged at the time of the initial financial closure of the project.

The projects sanctioned before 1997 with the original project cost of Rs 100 crore or more where financial closure was not formally documented and where the deemed date of completion of the project has been decided by an independent group of outside experts may be treated as a standard asset for a period not exceeding two years and beyond the deemed date of completion of the project as decided by the group.

The projects sanctioned before 1997 with original project cost of less than Rs 100 crore where financial closure was not formally documented may be treated as standard asset only for a period not exceeding two years beyond the date of completion of the project as originally envisaged at the time of sanction.

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