Reserve Bank relaxes norms for 7 infra projects

Mumbai: The Reserve Bank of India has relaxed asset classification and provisioning norms for banks in respect of seven delayed infrastructure projects.

As a one-time measure, it has allowed them to classify these projects as ‘Standard’ upon restructuring even if the account was classified as non-performing asset at the time of restructuring.

The projects are Nandi Economic Corridor enterprises Ltd, GVK Industries Ltd, Gautami Power Ltd, Konaseema Gas Power Ltd, New Tirupur Area Development Corporation, Vemagiri Power Generation Ltd, Delhi Gurgaon Super Connectivity Ltd.

The RBI further said that in view of the current market developments, the relaxation in classification would be available only if the restructuring package for the projects was implemented within a period of six months beginning November 14.

Banks are expected to get relief on the provisioning front on account of this move.

The central bank’s move follows representation by the Indian Banks’ Association (IBA) seeking relaxation when the completion of infrastructure projects gets delayed for legal and other extraneous reasons.

The IBA had sought special regulatory treatment for their asset classification.

The RBI has asked banks to undertake a fresh financial viability study of these projects in order to assess their eligibility for restructuring.