Project Loans for Infrastructure Sector
(i) A loan for an infrastructure project will be classified as NPA during any time before commencement of commercial operations as per record of recovery (90 days overdue), unless it is restructured and becomes eligible for classification as ‘standard asset’ in terms of paras (iii) to (v) below.
(ii) A loan for an infrastructure project will be classified as NPA if it fails to commence commercial operations within two years from the original DCCO, even if it is regular as per record of recovery, unless it is restructured and becomes eligible for classification as ‘standard asset’ in terms of paras (iii) to (v) below.
(iii) If a project loan classified as ‘standard asset’ is restructured any time during the period up to two years from the original date of commencement of commercial operations (DCCO), in accordance with the provisions of Part B of this Master Circular, it can be retained as a standard asset if the fresh DCCO is fixed within the following limits, and further provided the account continues to be serviced as per the restructured terms.
(a) Infrastructure Projects involving court cases Up to another 2 years (beyond the existing extended period of 2 years i.e. total extension of 4 years), in case the reason for extension of date of commencement of production is arbitration proceedings or a court case.
(b) Infrastructure Projects delayed for other reasons beyond the control of promoters Up to another 1 year (beyond the existing extended period of 2 years i.e. total extension of 3 years), in other than court cases.
(iv) It is re-iterated that the dispensation is subject to adherence to the provisions regarding restructuring of accounts as contained in the Master Circular which would inter alia require that the application for restructuring should be received before the expiry of period of two years from the original DCCO and when the account is still standard as per record of recovery.
The other conditions applicable would be:
a. In cases where there is moratorium for payment of interest, banks should not book income on accrual basis beyond two years from the original DCCO, considering the high risk involved in such restructured accounts.
b. Banks should maintain provisions on such accounts as long as these are classified as standard assets as under:
(v) For the purpose of these guidelines, mere extension of DCCO would not be considered as restructuring, if the revised DCCO falls within the period of two years from the original DCCO. In such cases the consequential shift in repayment period by equal or shorter duration (including the start date and end date of revised repayment schedule) than the extension of DCCO would also not be considered as restructuring provided all other terms and conditions of the loan remain unchanged.
(iv) In case of infrastructure projects under implementation, where Appointed Date (as defined in the concession agreement) is shifted due to the inability of the Concession Authority to comply with the requisite conditions, change in date of commencement of commercial operations (DCCO) need not be treated as ‘restructuring’, subject to following conditions:
a. The project is an infrastructure project under public private partnership model awarded by a public authority;
b. The loan disbursement is yet to begin; c. The revised date of commencement of commercial operations is documented by way of a supplementary agreement between the borrower and lender; and
d. Project viability has been reassessed and sanction from appropriate authority has been obtained at the time of supplementary agreement.