The Reserve Bank of India, through a circular dated 2 June, has permitted non-banking financial companies (NBFCs) to refinance infrastructure and other project loans by way of take-out financing without a predetermined agreement with other lenders, and to fix a longer payment period. The circular also states that such an arrangement shall not be considered to be a restructuring if the following conditions are satisfied:
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- Such loans should be standard in the books of existing lenders, and should not have been restructured in the past;
- Such loans should be substantially taken over (more than 50% of the outstanding loan by value) from the existing financing lenders;
- The repayment period should be fixed by taking into account the life cycle of the project and cash flows from the project.
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