 "RBI relaxes takeout financing norms for existing infrastructure loans")
The Reserve Bank of India (RBI) has relaxed the norms pertaining to takeout financing for existing infrastructure loans by lowering the minimum takeout requirement to 25 per cent from 50 per cent.
The central bank also clarified that the loans with a minimum of Rs 1,000 crore would be eligible for takeout financing agreement. In addition, a project should have started commercial operation after achieving the date of commencement of commercial operation. According to RBI, only standard loans are eligible for takeover.
The government and RBI have taken several steps in recent times to boost infrastructure financing. Banks have been exempted from maintaining cash reserve ratio (CRR) and statutory liquidity ratio (SLR) and also priority sector lending (PSL) targets for raising resources via long-term bonds to fund infrastructure and affordable housing sector.
“On the liability side, banks will be permitted to raise long-term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and PSL,” he had further said.
The central bank also clarified that the loans with a minimum of Rs 1,000 crore would be eligible for takeout financing agreement. In addition, a project should have started commercial operation after achieving the date of commencement of commercial operation. According to RBI, only standard loans are eligible for takeover.
The government and RBI have taken several steps in recent times to boost infrastructure financing. Banks have been exempted from maintaining cash reserve ratio (CRR) and statutory liquidity ratio (SLR) and also priority sector lending (PSL) targets for raising resources via long-term bonds to fund infrastructure and affordable housing sector.
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“Long-term financing for infrastructure has been a major constraint in encouraging larger private sector participation in this sector. On the asset side, banks will be encouraged to extend long-term loans to infrastructure sector with flexible structuring to absorb potential adverse contingencies, sometimes known as the 5/25 structure,” Finance Minister Arun Jaitley said in his Budget speech.
“On the liability side, banks will be permitted to raise long-term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and PSL,” he had further said.