Mumbai: The Reserve Bank today allowed banks to refinance existing infrastructure project loans through take-out financing agreements with any financial institution. “Banks can refinance their existing infrastructure project loans by entering into take-out financing agreements with any financial institution on a pre-determined basis,” the RBI said in its ‘Framework for Revitalising Distressed Assets', released this evening.
The central bank said infrastructure and other project loans can be refinanced by other institutions which substantially take over the loan, and the refinancing institution can fix a repayment period by taking into account the life cycle of the project and cash flows from the project. One of the major sources of the bad loans is infra sector.
The RBI in its half-yearly financial stability report on December 30 had projected that gross non-performing assets in the system would rise to 4.6 per cent by September 2014 from 4.2 per cent in September 2013 or about Rs 2.29 trillion from Rs 1.67 trillion a year earlier. The amount of recast loans touched an all-time high of Rs 4 trillion or 10.2 per cent of the overall advances as of September 2013.
