RBI reworks rules for long-term infrastructure refinancing loans

The Reserve Bank has relaxed norms for refinancing of infrastructure loans which banks want to be tagged as standard assets. From April 2015, the moment a loan is restructured, banks will have to classify them as bad loan. RBI had made an exception to the rule by allowing banks to classify infrastructure loans as standard assets if half of the outstanding loans are refinanced by a new set of lenders in the form of take-out financing. The central bank relaxed this norm by allowing standard tag if 25 per cent of the outstanding is met through take-out financing. Also, an infrastructure loan that is refinanced can be tagged as standard asset provided promoters are willing to invest more equity in the project. But the standard tag will be applicable only if the project has started commercial operation, the central bank said on Thursday. It said this dispensation would be only for infrastructure loans above Rs 1,000 crore and for loans that are not restructured in the past.


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