Banking Bureau In a significant one-time measure that highlights the government's resolve to kickstart infrastructure, the Reserve Bank of India has asked banks to undertake fresh financial viability studies of seven major projects to assess their eligibility for restructuring. The total exposure of the banking sector to these projects is around Rs 14,000 crore
These seven projects are Nandi Economic Corridor Enterprises, (for a road project and township), GVK Industries (a gas-based power project), Gautami Power (a gas-based power project), Konaseema Gas Power (a gas-based power project), New Tirupur Area Development Corporation, (development of the Tirupur area), Vemagiri Power Generation (a gas-based power project), and Delhi-Gurgaon Super Connectivity Ltd. In case the projects are found eligible and the banks concerned chose to undertake their restructuring, the apex bank has decided that as a one-time measure given recent developments in the market, that the seven projects under implementation would be categorised as 'standard', even if the account was a non-performing asset, provided the restructuring is implemented within six months. RBI said banks have earlier represented that that there have been occasions when the completion of infrastructure projects was delayed for legal and other reasons."The Indian Banks' Association has furnished us a list of seven such projects where the commencement of production/operation has already been considerably delayed and has sought special regulatory treatment for their asset classification,'' said RBI. Going by existing norms for infrastructure projects financed by banks or financial institutions, after May 28, 2002, the date of completion of a project should be clearly spelt out at the time of financial closure. From March 31 this year, if the date of commencement of commercial production or operation extends beyond a period of two years after the date of completion of the infrastructure project as envisaged at initial financial closure, the account should be treated as a substandard asset. Further, existing norms prescribe that if a project is approaching the two-year period, banks should undertake a viability study to assess its eligibility for restructuring and to ensure that the asset quality is maintained. RBI has said that the restructuring of the remaining loan portfolio of banks would continue to be subject to the guidelines contained in its circular dated August 27. http://www.financialexpress.com/news/rbi-offers-asset-reclassification-for-seven-infrastructure-projects/386003/ When prosperity comes, do not use all of it. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
