RBI asks banks to review viability of 7 infrastructure projects

15 Nov 2008

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Mumbai: The Reserve Bank has asked banks to undertake a review of the financial viability of seven infrastructure projects whose operations have been considerably delayed, even as it extended the special term repo facility to help mutual funds and non-banking finance companies till March 2009.

RBI said the review is being made to decide whether these projects are eligible for restructuring or are bad debts eligible to be categorised as non-performing assets.

These projects include Nandi Economic Corridor Enterprises, GVK Industries, Gautami Power, Konaseema Gas Power, New Tirupur Area Development Corporation, Vemagiri Power Generation and Delhi Gurgaon Super Connectivity.

The Indian Banks Association has given a list of projects to RBI to seek special regulatory treatment for asset classification.

''The request of IBA has been examined. We advise the banks may take a fresh financial viability study of these projects in order to assess their eligibility for restructuring," the central bank said.

As per the current norms, the advances by banks and financial institutions to infrastructure projects can be treated as sub-standard assets if the date of commencement of commercial production or operation extends two years beyond the date of completion of the project, as envisaged at the time of tying up the loan.

RBI also increased the interest rate ceiling on FCNR (B) and NR(E) RA deposits for NRIs by 0.75 per cent with immediate effect.

The central bank allowed housing finance companies to raise short-term foreign currency borrowings as a temporary measure. The details will be notified separately.

RBI said it will consider proposals from Indian companies to prematurely buy back FCCBs in view of global developments.

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