Government asks RBI to relax rules to revive shipyards

The government Thursday said it has asked the apex bank to relax some of the financial regulations on banks which are engaged in corporate debt restructuring (CDR) of shipyards to revive the industry.

According to Minister of State for Shipping Pon. Radhakrishnan, the government has requested the Reserve Bank of India (RBI) and the finance ministry to sanction special dispensation for five years up to March 31, 2020, for the first CDR of shipyards.

"Shipyards may need to opt for CDR to restructure their loans. However, when first restructuring fails, the loans become NPAs (non-performing assets) and hence bankers find it difficult to undertake repeated restructuring," the minister informed parliament.

Among other steps taken by the government was extension of the shipbuilding subsidy scheme, the minister said.

The minister added that shipping is highly capital intensive and depends largely on the debt market to finance its acquisitions.

"Availability of loans has almost dried and if any credit is available, it is at a very high cost and stringent terms," the minister added.