Project Loans for Non-Infrastructure Sector
3.95(i) A loan for a non-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 (iv) below.
(ii) A loan for a non-infrastructure project will be classified as NPA if it fails to commence commercial operations within one year from the original DCCO, even if is regular as per record of recovery, unless it is restructured andbecomes eligible for classification as ‘standard asset’ in terms of paras (iii) to (iv) below.
(iii) In case of non-infrastructure projects, if the delay in commencement of commercial operations extends beyond the period of one year from the date of completion as determined at the time of financial closure, banks can prescribe a fresh DCCO, and retain the “standard” classification by undertaking restructuring of accounts in accordance with the provisions contained in this Master Circular, provided the fresh DCCO does not extend beyond a period of two years from the original DCCO. This would among others also imply that the restructuring application is received before the expiry of one year from the original DCCO, and when the account is still “standard” as per the 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 one year 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:
Particulars |
Provisioning Requirement |
If the revised DCCO is within one year from the original DCCO prescribed at the time of financial closure |
0.40 per cent |
If the DCCO is extended beyond one year and upto two years from the original DCCO prescribed at the time of financial closure |
Project loans restructured with effect from June 1, 2013:5.00 per cent – From the date of restructuring for 2 years
|
(iv) For this purpose, 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.