RBI further eases project loan recast norms for NBFCs

The Reserve Bank today allowed non-bank lenders to retain the 'standard asset' tag on a restructured loan for an extended period if an infrastructure project is mired in court cases or has been stuck due to reasons beyond the control of promoters.
The move will help revive the stalled projects in the economy as the Non Banking Finance Companies (NBFC) like IL&FS lend for projects.
For the lender, classification as a standard asset helps in lower provisioning.
The RBI had first allowed the NBFCs to restructure infrastructure loans in January this year, giving them the facility so far restricted to banks.

In the review of the guidelines issued today, the central bank said an asset can be treated as 'standard' if the date of commencement of commercial operations of an infrastructure project loan is missed due to arbitration proceedings or a court case.
The ability to treat the asset as a standard loan got extended to up to four years from the earlier two years.

For projects stuck due to reasons beyond the control of promoters, the leeway is only for one more year over the earlier announced two years, it said.
Non-infrastructure projects, excluding commercial realty, will also get a leeway of an extra year over the earlier announced one year taking the total benefit to two years, it added.

The RBI made it clear that all the flexibilities are subject to the account continues to be serviced as per the restructured terms.
It also eased norms for restructuring of project loans which have had ownership changes before the date of commencement of commercial operations and the project has failed to start operations.
NBFCs will be eligible for a further extension of date of commencement of commercial operations without attracting a non-performing asset account tag, it said.