Dated: June 02, 2016
All Non-Banking Financial Companies
Refinancing of Project Loans
Please refer to circular DNBS.(PD).CC.No.371/03.05.02/2013-14 dated March 21, 2014, issued by Department of Non-Banking Supervision on Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy.
2. In view of the references received from NBFCs and on the lines of instructions contained in circulars, DBOD.BP.BC.No.98/21.04.132/2013-14 dated February 26, 2014 and DBOD.BP.BC.No.31/21.04.132/2014-15 dated August 07, 2014 issued by the Department of Banking Operations and Development on Framework for Revitalising Distressed Assets in the Economy – Refinancing of Project Loans, Sale of NPA and Other Regulatory Measures and Refinancing of Project Loans, respectively, it has been decided that similar instructions on refinancing of projects loans be extended to NBFCs also.
3. Accordingly, NBFCs may refinance any existing infrastructure and other project loans by way of take-out financing, without a pre-determined agreement with other lenders, and fix a longer repayment period, the same would not be considered as restructuring if the following conditions are satisfied:
4. For existing project loans where the aggregate exposure of all institutional lenders is minimum ₹ 1,000 crore, NBFCs may refinance such loans by way of full or partial take-out financing, even without a pre-determined agreement with other lenders, and fix a longer repayment period, and the same would not be considered as restructuring in the books of the existing as well as taking over lenders, if the following conditions are satisfied:
5. A lender who has extended only working capital finance for a project may be treated as ‘new lender’ for taking over a part of the project term loan as required under the guidelines.
6. The above facility will be available only once during the life of the existing project loans.
Chief General Manager