Bank Finance & Project Report Essentials – What Lenders Expect In 2025

Introduction

Securing bank finance or project funding in India in 2025 demands much more than a good business idea. Lenders are increasingly disciplined, risk‐aware and data-driven. With the regulatory environment tightening and banks keen to manage asset quality, any project or business seeking funding must present a robust, bank-ready project report coupled with strong compliance and governance. In this blog we explore:

• key features of what lenders expect
• typical content of a project report
• the emerging regulatory/market context
• how your business (or your advisory client) can prepare—and how our CA team can help.

1. What’s changing in the lending environment

• According to latest banking insights from Reserve Bank of India (RBI), while credit growth is steady, risks such as a widening credit-deposit gap and rising unsecured lending impairments are on the radar. Grant Thornton Bharat
• Regulatory directions for project finance (e.g., on debt‐equity ratios, deferment, cost overruns) have been clarified. For example, in June 2025 a commentary on RBI’s “Project Finance Directions” emphasises that post‐funding key financial metrics (debt/equity ratio, credit rating) must remain stable or improve. Vinod Kothari Consutants
• The overall macro environment remains favourable but prudent: India’s credit demand is rising, but banks require higher discipline. HDBFS+1
  Hence, lenders are not only looking at the “plan” but also the “process & controls” behind funding.

2. What lenders expect from a project report

2.1 Core structural expectations

• A clear executive summary: project name, promoter background, business model, funding sought, use of funds, and expected returns.
• Detailed project cost: capital expenditure (CapEx), pre‐operative expenses, working capital requirement, contingency provisions.
• Financing plan: debt/equity structure, tenure, interest rate assumptions, moratorium periods, repayment schedule.
• Risk analysis: sensitivity of returns (e.g., ±10% change in revenue, ±2% interest rate variation), key risk mitigants.
• Projections of cash flows: typically 3-5 years of detailed forecast, followed by long-term (or terminal value) assumptions if applicable.
• Key ratios: DSCR (Debt Service Coverage Ratio), IRR (Internal Rate of Return), pay‐back period, Return on Capital Employed (ROCE).
• Supporting documentation: project licences/approvals, land or site documentation, equipment supplier letters, off‐take agreements (for manufacturing), etc.
• Governance & compliance disclosures: promoter history, related‐party transactions, audits/financials for existing business (if expansion), ESG/CSR aspects if relevant (infrastructure projects).
• Exit/repayment strategy: how the borrower intends to service the debt if things don’t go as planned (e.g., refinancing, asset sale possibility, alternate revenues).

2.2 The lender’s checklist – what gets special scrutiny

• Promoter track record & financials: banks will review promoter’s past performance, credit history, ability to inject equity as required.
• Debt/Equity ratio: A conservative ratio is preferred; many banks may require 30-40 % plus equity for large projects. Under the new directions cost overrun financing must be arranged upfront.
• Working capital structure and assumptions: realistic revenue assumptions, inventory turn, receivables collection, margin for buffer.
• Interest rate and inflation sensitivity: as interest rates remain elevated in many sectors, banks will test the project for adverse scenarios.
• Cost overruns and time delays: delayed completion or cost escalation increases risk of loan becoming non-performing. The bank will look for contingencies and standby financing.
• Cash flow adequacy for servicing: DSCR above a threshold (often 1.25x or better), realistic margin of error.
• Loan security / collateral: ownership of land/building, hypothecation/mortgage of assets, escrow account, assignment of receivables.
• Regulatory/compliance approvals: especially for infrastructure, manufacturing, real estate – absence may block disbursement.
• Governance & disclosure: regular audits, proper financial statements, related‐party transparency, ESG compliance (increasingly demanded).
• Exit strategy and risk sharing: For large projects, the bank may want a minimum promoter stake lock‐in or escrow mechanism.

3. Key sections your project report must include

Here is a recommended outline and what you should ensure in each section:

 4. Emerging expectations for 2025 & beyond

• Digital/automated reporting: Banks increasingly expect disbursement triggers tied to digital dashboards or project monitoring.
• Sustainability/ESG focus: Especially for manufacturing and infrastructure projects, banks may expect an ESG risk assessment and green finance linkages.
• Stronger stress testing: With macro headwinds (interest rates, inflation, global disruptions) banks will test “what‐if” scenarios more aggressively.
• Large exposures & NPA risk: With banks aiming to keep NPAs low, they will scrutinise large projects more heavily. The RBC for project finance is tighter.
• Cost overrun clauses: RBI directions emphasise that cost overruns must be financed via standby credit facility upfront (particularly for large projects).
• Shorter cycle times and clearer documentation: Funding turnaround times matter; incomplete or unclear project reports risk delays or rejection. 

5. How businesses should prepare (action plan)

1. Start early: Begin work on the project report well ahead of approaching the bank. Collect documentation, get quotations, finalise CapEx.
2. Ensure promoter’s financials are clean: Audited statements, minimal outstanding liabilities, good credit history.
3. Build multiple scenarios: Base case, conservative (−10 % revenue) and optimistic (+10 % cost efficiency) to show robustness.
4. Prepare a strong working capital plan: Show that you’ve accounted for cash conversions (inventory, receivables) and margin buffers.
5. Secure approvals and documentation upfront: Land, licence, environment, technology supplier agreements—laying these early ups your credibility.
6. Include strong risk mitigation narrative: Execution delays, vendor defaults, regulatory changes—show your plan to manage them.
7. Use proper financial modelling: Use Excel (or similar) with clearly referenced assumptions, projected DSCR and repayment schedule.
8. Engage advisors (CAs, Project Consultants): A professionally prepared report reflects your seriousness and readiness; banks will value it.
9. Set up monitoring/reporting dashboards: Post sanction, you’ll need to report progress to the bank—prepare for that from day one.
10. Focus on governance & transparency: Related‐party disclosures, board minutes, auditor reviews—all help strengthen your borrowership perception.

6. Role of Ghetiya M C & Co – How We Can Assist

As your strategic CA and advisory partner, we can support you at every step:

• Prepare or review your project report, ensuring it meets bank criteria and industry best-practice.
• Financial modelling services: build robust forecasts, sensitivity tables, repayment schedules.
• Compliance & documentation review: promoter background, statutory approvals, security documentation, escrow/trust structures.
• Risk management advisory: identify project risks, design mitigation strategies, document these in the report.
• Engagement with lenders: we can liaise with your bank, clarify assumptions, respond to queries, and help shorten funding cycles.
• Post-sanction monitoring: assist setup of project monitoring dashboards, cash-flow review, variance analysis and regular reporting to lenders.

Conclusion

In 2025, banks expect more than just a good business idea—they demand robust planning, professional documentation, disciplined forecasting and strong compliance. A well-structured project report aligned with lender expectations can significantly improve your chances of funding, better terms and smoother execution. At Ghetiya M C & Co, our advisory focus aligns with these expectations, helping you bridge the gap from plan to sanction.