Regulator proposes tighter guidelines on infra funding

In the case of projects financed under consortium arrangements, where the aggregate exposure borrowing is up to Rs 1,500 crore, each lender should have a minimum exposure of 10%. If the aggregate exposure is more than '1,500 crore, individual exposure should not be less than 5% or '150 crore, whichever is higher. However, after the DCCO, lenders may acquire from or sell exposures to other lenders - new or existing - in the multiple banking or consortium arrangements.

RBI has also proposed that banks provide 5% of the funded outstanding on all existing as well as fresh exposures on a portfolio basis.

In its draft guidelines, the RBI discouraged banks from designing finance agreements that allow a moratorium on repayments beyond the DCCO. The repayment structure should factor in lower initial cash flows, it said. However, if lenders decide to grant a moratorium on repayment beyond the DCCO, the moratorium cannot exceed six months from the commencement of commercial operations.

The RBI also proposed that the original or revised repayment tenor, including the moratorium period, if any, should not exceed 85% of the economic life of the project.

The dispensations under this framework shall be available only to those lenders who have extended finance to such project loans based on a common agreement between the debtor and the lenders, the RBI said.

For infrastructure projects under the public-private partnership (PPP) model, lenders can consider 50% or more land availability sufficient to achieve financial closure, said the draft guidelines.

The RBI also said that lenders should ensure that disbursal is proportional to the stages of completion of the project as well as to the progress in equity infusion by the promoter.

A positive net present value (NPV) is a prerequisite for any project financed by lenders, said the draft guidelines.