Bringing non-banking finance companies on a par with banks, the Reserve Bank of India (RBI) expanded the scope of forbearance on restructured loans of projects for NBFCs, saying that lenders can classify restructured loans as standard in case a project is stuck for a total six years, provided the final two-year delay is due to a change of ownership.
In January, the RBI had allowed NBFCs to classify loans to projects that are stuck for two years as standard even after restructuring them when such recast involves only a change in repayment schedule.
Further for infrastructure projects stuck due to arbitration in courts, a further relaxation of two years has been given.
That is, an NBFC can classify a restructured loan as standard if the project to which the loan is given has been delayed for a total four years. For infrastructure projects stuck due to reasons beyond the promoter’s control and for non-infrastructure projects, this leeway was only three years.
Now, if during these 3-4 years, the project’s commercial operations are likely to be delayed due to ‘inadequacies’ of the promoters and a change in ownership is kickstarted, the NBFC can extend repayment deadline by a further two years and can still classify the loan as standard.