RBI eases lending norms: boost to infra sector expected
The Reserve Bank of India (RBI) has dropped the threshold for partial take-out financing by new lenders to a minimum of 25 % of the outstanding loan from 50 % now. The guidelines for refinancing the project loans were eased to quite an extent and the RBI declared that the reworked loan will not be considered a restructured asset.
The 50 % limit was proving to be a hurdle for the new lenders to enter a consortium as most of the larger banks were already members. The RBI instructed the promoters by stating that they must bring in additional equity, if needed, to pare the debt and make the debt-equity ratio and debt service coverage ratio acceptable to the banks. The central bank has also tried to ensure that the promoters have a strong base before they take these steps.
Also the good news is that now the RBI does not have any objection to the loan having been restructured in the past as long as it is a standard asset on the books of existing lenders at the time of refinancing.
Vikram Limaye the managing director and CEO of IDFC (IDFC is a leading finance company in India), observed that the new rules clarified the issue that the banks were facing. Genuine refinancing was classified as restructured loans and that was creating the bottleneck. Limaye also expressed his happiness over the matter and stated that the new guidelines will facilitate refinancing.
Source- The Financial Express
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