Mumbai, Jan 20 (KNN)  Reserve Bank of India has issued guidelines to banks for flexible structuring and refinancing of fresh term loans to long term project loans to infrastructure and core industries.

“NBFCs also are engaged in financing of long term project loans to infrastructure and core industries. While Reserve Bank’s extant instructions do not come in the way of NBFCs structuring long term project financing products, requests have been made by the industry, for extending the above guidelines to them. Accordingly, it has been decided to issue necessary directions to NBFCs,” the apex bank said in a notification on Monday.

The move that allows NBFCs to restructure project loans and continue treating them as standard advances for projects that have not begun operations owing to various reasons; comes after the country’s central bank last month permitted banks to restructure infrastructure project loans. 

“NBFCs may restructure such loans, subject to the extant prudential norms on restructuring of advances, by way of revision of DCCO (date of commencement of commercial operations…and retain the ‘standard’ asset classification…,” the apex bank said in a circular of January-16.

However, RBI has specified that the such restructuring can only be use for infrastructure projects involving court cases, infrastructure projects delayed for other reasons beyond the control of promoters and for project loans for non-infrastructure sector (other than commercial real estate exposures).

Further, in cases where the initial financial closure does not envisage such financing of cost overruns, NBFCs have been allowed to fund cost overruns, which may arise on account of extension of DCCO within the time limits quoted in the above, without treating the loans as ‘restructured asset.’

RBI said that NBFCs may fund additional ‘Interest during Construction’, which may arise on account of delay in completion of a project.  (KNN/ES)