RBI move to help revive stalled projects, NBFC loan restructuring norms eased

The central bank had earlier extended many sops for bank funding of stalled projects.

In a bid to facilitate revival of the projects stalled primarily due to inadequacies of the current promoters, the Reserve Bank of India (RBI) has relaxed the rules governing the restructuring and repayment of loans extended by non-banking finance companies (NBFCs).

According to the RBI, if a change in ownership takes place any time before the original date of commissioning (DCCO) of a project, NBFCs may permit extension of the DCCO of the project up to two years without any change in asset classification of the account subject to certain conditions. “NBFCs may also consequentially shift/extend repayment schedule, if required, by an equal or shorter duration,” it said in a circular.

[related-post]

Similarly, where change in ownership and extension of DCCO takes place, the account may still be restructured by extension of DCCO without classifying the account as non-performing asset, the RBI said. The central bank had earlier extended many sops for bank funding of stalled projects.

This will be applicable to infrastructure projects involving court cases for up to another two years (total extension of four years), in case the reason for extension of DCCO is arbitration proceedings or a court case. For infrastructure projects delayed for other reasons beyond the control of promoters, the relaxation will be applicable for up to another one year (total extension of three years).

For project loans for non-infrastructure sector (other than commercial real estate exposures), it will be for up to another one year (total extension of two years).

The RBI has listed three main conditions for the loan restructuring. NBFCs should establish that implementation of the project is stalled primarily due to inadequacies of the current promoters/management and with a change in ownership there is a very high probability of commencement of commercial operations by the project within the extended period.