ISA hails RBI move for flexible restructuring of project loans

RBI's decision to extend facility of flexible structuring of long-term project loans will go a long way to bolster the financial viability of steel and allied core industry projects, the Indian Steel Association said today.
"ISA is of the view that this decision of the RBI will go a long way to bolster the financial viability of the steel and allied core industry projects and thereby strengthen the sustainability of steel sector as a whole," the association said in a release.
"It should also help provide the industry sufficient liquidity," it added.
Earlier this week, the Reserve Bank allowed lenders to extend the facility of flexible structuring of long-term loans to infrastructure and core industries projects, new as well as existing projects.

The facility could be exercised once during the life time of the project after the date of commencement of commercial operations.
Prior to the new guidelines, lenders were not able to re-finance these old loans, even when the medium to long-term asset seemed to be making adequate returns, as RBI used to allow it only to new loans sanctioned with prospective effect.
"Steel industry projects have a long gestation period and by the time it is completed and the benefit from the same is realised, the organisation starts facing the challenge of servicing interest and the principal," ISA said.