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

Loktantra Bachao Abhiyan raises concerns over Jharkhand Adivasis' plight in Assam, BJP policies

By Our Representative The Loktantra Bachao Abhiyan (Save Democracy Campaign) has issued a pressing call to protect Adivasi rights in Jharkhand, highlighting serious concerns over the treatment of Jharkhandi Adivasis in Assam. During a press conference in Ranchi on November 9, representatives from Assam, Chhattisgarh, and Madhya Pradesh criticized the current approach of BJP-led governments in these states, arguing it has exacerbated Adivasi struggles for rights, land, and cultural preservation.

Promoting love or instilling hate and fear: Why is RSS seeking a meeting with Rahul Gandhi?

By Ram Puniyani* India's anti-colonial struggle was marked by a diverse range of social movements, one of the most significant being Hindu-Muslim unity and the emergence of a unified Indian identity among people of all religions. The nationalist, anti-colonial movement championed this unity, best embodied by Mahatma Gandhi, who ultimately gave his life for this cause. Gandhi once wrote, “The union that we want is not a patched-up thing but a union of hearts... Swaraj (self-rule) for India must be an impossible dream without an indissoluble union between the Hindus and Muslims of India. It must not be a mere truce... It must be a partnership between equals, each respecting the religion of the other.”

Right-arm fast bowler who helped West Indies shape arguably greatest Test team in cricket history

By Harsh Thakor* Malcolm Marshall redefined what it meant to be a right-arm fast bowler, challenging the traditional laws of biomechanics with his unique skill. As we remember his 25th death anniversary on November 4th, we reflect on the legacy he left behind after his untimely death from colon cancer. For a significant part of his career, Marshall was considered one of the fastest and most formidable bowlers in the world, helping to shape the West Indies into arguably the greatest Test team in cricket history.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Andhra team joins Gandhians to protest against 'bulldozer action' in Varanasi

By Rosamma Thomas* November 1 marked the 52nd day of the 100-day relay fast at the satyagraha site of Rajghat in Varanasi, seeking the restoration of the 12 acres of land to the Sarva Seva Sangh, the Gandhian organization that was evicted from the banks of the river. Twelve buildings were demolished as the site was abruptly taken over by the government after “bulldozer” action in August 2023, even as the matter was pending in court.

Will Left victory in Sri Lanka deliver economic sovereignty plan, go beyond 'tired' IMF agenda?

By Atul Chandra, Vijay Prashad* On September 22, 2024, the Sri Lankan election authority announced that Anura Kumara Dissanayake of the Janatha Vimukthi Peramuna (JVP)-led National People’s Power (NPP) alliance won the presidential election. Dissanayake, who has been the leader of the left-wing JVP since 2014, defeated 37 other candidates, including the incumbent president Ranil Wickremesinghe of the United National Party (UNP) and his closest challenger Sajith Premadasa of the Samagi Jana Balawegaya.

A Hindu alternative to Valentine's Day? 'Shiv-Parvati was first love marriage in Universe'

By Rajiv Shah The other day, I was searching on Google a quote on Maha Shivratri which I wanted to send to someone, a confirmed Shiv Bhakt, quite close to me -- with an underlying message to act positively instead of being negative. On top of the search, I chanced upon an article in, imagine!, a Nashik Corporation site which offered me something very unusual.

Will Bangladesh go Egypt way, where military ruler is in power for a decade?

By Vijay Prashad* The day after former Bangladeshi Prime Minister Sheikh Hasina left Dhaka, I was on the phone with a friend who had spent some time on the streets that day. He told me about the atmosphere in Dhaka, how people with little previous political experience had joined in the large protests alongside the students—who seemed to be leading the agitation. I asked him about the political infrastructure of the students and about their political orientation. He said that the protests seemed well-organized and that the students had escalated their demands from an end to certain quotas for government jobs to an end to the government of Sheikh Hasina. Even hours before she left the country, it did not seem that this would be the outcome.

Green Revolution’s reliance on chemical fertilizers, pesticides contributing to Punjab's health crisis

By Bharat Dogra, Jagmohan Singh* Punjab was once synonymous with robust health, particularly in its rural areas, where farmers were known for their strength and vitality. However, in recent years, reports from these villages tell a different story, with rising cases of serious health issues, including cancer. What led to this decline? The answer lies largely in the erosion of good nutrition, once a hallmark of Punjabi village life. The health of a population is closely tied to its nutrition, and Punjab's reputation as a provider of high-quality nutrition has suffered greatly. The loss of biodiversity in agriculture has led to a decrease in the variety and quality of crops, resulting in poorer nutrition. Pulses, a key source of protein, have seen a steep decline in cultivation due to the disruption of traditional farming practices by the Green Revolution. This has had a detrimental effect on both soil and human health. Although pulses are still available in the market, they are exp

A Marxist intellectual who dwelt into complex areas of the Indian socio-political landscape

By Harsh Thakor* Professor Manoranjan Mohanty has been a dedicated advocate for human rights over five decades. His work as a scholar and activist has supported revolutionary democratic movements, navigating complex areas of the Indian socio-political landscape. His balanced, non-partisan approach to human rights and social justice has made his books essential resources for advocates of democracy.

Search This Blog