The Hindu : Business : Special treatment for 7 infra projects

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Saturday, Nov 15, 2008
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Special treatment for 7 infra projects

Special Correspondent

MUMBAI: The Reserve Bank of India on Friday allowed seven infrastructure projects for special regulatory treatment under the central bank’s restructuring guidelines, if these projects are restructured within six months from November 14.

The projects are: Nandi Economic Corridor enterprises (road project and township); GVK Industries (gas-based power project — Phase-II); Gautami Power (gas-based power project); Konaseema Gas Power (gas-based power project); New Tirupur Area Development Corporation (development of Tirupur area); Vemagiri Power Generation (gas-based power project); Delhi Gurgaon Super Connectivity.

In terms of RBI norms, for the infrastructure projects also, financed by banks and financial institutions after May 28, 2002, the date of completion of the project should be clearly spelt out at the time of financial closure of the project.

In such cases, with effect from March 31, 2008, if the date of commencement of commercial production/operation extends beyond two years after the date of completion of the infrastructure project, as originally envisaged at the time of initial financial closure of the project, the account should be treated as a sub-standard asset.

“It has been represented to us that there are occasions when the completion of infrastructure projects gets delayed for legal and other extraneous reasons. The Indian Banks’ Association (IBA) has furnished us a list of seven such projects where the commencement of production/operation has already been considerably delayed and has sought special regulatory treatment for their asset classification,” the RBI stated.

“We advise that the banks may undertake a fresh financial viability study of these projects in order to assess their eligibility for restructuring,” the RBI added.

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