Refinancing of Project loans - RBI - Reserve Bank of India
Refinancing of Project loans
RBI/2014-15/167 August 7, 2014 All Scheduled Commercial Banks Dear Sir, Refinancing of Project loans Please refer to our circular DBOD.BP.BC.No.24/21.04.132/2014-15 dated July 15, 2014 on ‘Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries’, which enables banks to flexibly structure new long term project loans to infrastructure and core industries. 2. However, with regard to existing infrastructure and other project loans, banks were allowed, vide paragraph 2 of our circular DBOD.BP.BC.No.98/21.04.132/2013-14 dated February 26, 2014 on ‘Framework for Revitalising Distressed Assets in the Economy - Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures’, to refinance by way of take-out financing, even without a pre-determined agreement with other banks / FIs, and fix a longer repayment period without treating the same as restructuring if the following conditions are satisfied:
3. The feedback received from banks shows that the above stipulation of substantial take-over of loans i.e., more than 50% of the outstanding loan by value from the existing financing banks / financial institutions is generally difficult to achieve, since a significant number of banks are already part of the consortium/multiple banking arrangement of such project loans. 4. Therefore, in respect of existing project loans, it has been decided that banks may refinance such loans by way of full or partial take-out financing, even without a pre-determined agreement with other banks / FIs, and fix a longer repayment period, and the same would not be considered as restructuring in the books of the existing as well as taking over lenders, if the following conditions are satisfied:
5. The above facility will be available only once during the life of the existing project loans. The refinancing of existing project loans not meeting the conditions mentioned at paragraph 4 above will continue to be governed by the instructions contained in paragraph 2 of our circular dated February 26, 2014 referred to above. Yours faithfully, (Sudarshan Sen) |