RBI permits flexible refinancing of existing infra projects

The RBI has allowed banks to refinance existing long-gestation projects in the infrastructure segment under flexible conditions, including that of core sector projects, to offer more flexibility to fund such projects.

The relaxation, under the so-called 5:25 refinance scheme, enables banks to refinance a project after a period of say every 5 or 7 years with new set of norms on pricing depending upon the prevailing conditions, RBI said in statement.

The facility will be offered only to term loans in projects where the aggregate exposure of all institutional lenders exceeds Rs 500 crore, RBI said

RBI also added that fresh amortization for existing projects will be allowed once during lifetime of the project and will not be termed as refinancing on certain riders being met.

Going by the guidelines, banks can determine the pricing at each stage of the project and such pricing should not be below the base rate, or minimum lending rate, of the bank.

Banks can extend tenure for infra loans classified as bad loans and the loan extension for such accounts should be termed recast loan, the apex bank said.