Under the Notification No RBI/2015 – 16/417DBNR.CC.PD.No.082/03.10.001/2015 – 16 dated June 02, 2016 (the NBFC Refinancing Circular), the Reserve Bank of India (RBI) has stated that Non – Banking Finance Companies (NBFCs) can refinance existing infrastructure and other project loans by way of take – out financing, under a longer repayment period and in absence of any pre – determined agreement, without such refinancing amounting to 'restructuring', on fulfilment of certain conditions.
Under the NBFC Refinancing Circular, such refinancing by NBFCs shall not be restructuring of the project loans provided that such loans have not been restructured in the past, at least 50% of such loans should have been taken over from the existing lenders and that the repayment period should be fixed taking into consideration the economic life of such project assets. In the event that the aggregate exposure of institutional lenders is in excess of Rs. 1000 crores, NBFCs may restructure such loans by way of full or partial take – out financing, provided that commercial operation of the project has been commenced, capping of the repayment period to less than 85% of the initial economic life of the project, such loans should not have been 'restructured' in the past and additional capital contribution by promoters. In case of partial take – out, at least 25% of the loan should be taken over by new lenders.
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