RBI revises asset classification norms for infra firms

RBI revises asset classification norms for infra firms
The Reserve Bank has allowed banks to treat loans as 'standard' even when date of commencement of project is delayed by two years, a move that would provide easier fund access to infrastructure firms, reported PTI.

"Revisions of the date of commencement of commercial operations (DCCO) and consequential shift in repayment schedule for equal or shorter duration (including the start date and end date of revised repayment schedule) will not be treated as restructuring," RBI said in a notification.

It is, however, subject to the revised DCCO falling "within the period of two years and one year from the original DCCO stipulated at the time of financial closure for infrastructure projects and non-infrastructure projects, respectively".

This will help banks to save on provisioning cost as they have to make lower provision if loan remains a standard one. At the same time, infrastructure projects would have easy access to bank finance.

According to notification, loans could be treated standard if an infrastructure project is involved in court cases and as a consequence of this there is a delay of four years. However, the company should continue to service debt obligation as per restructured norms.

In case if the infrastructure project is delayed for another one year (after two years) for other reasons beyond the control of promoters, it would be treated as a standard account.

Read more about: rbi
Story first published: Friday, June 27, 2014, 12:40 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Thousands of Goodreturn readers receive our evening newsletter.
Have you subscribed?